Zimbabwe: Law to Back Bond Notes Gazetted
by Elita Chikwati, published on All Africa, on November 19, 2016
Government has gazetted the Reserve Bank of Zimbabwe Amendment Bill 2016 to enable the central bank and Finance and Economic Development Minister to issue bond notes exchangeable at par value with the United States dollar.At the same time, the opportunity is taken to support the issuance of bond coins currently in circulation.
RBZ will determine the design, form and material of the notes and notify the public.
The Act – which may be cited as the RBZ Amendment Act 2016 – is deemed to have come into force on October 31, 2016.
In the Extraordinary Government Gazette of November 18, 2016, a bond note is defined as a unit of tender whose par value in relation to the US dollar is backed by a guarantee extended to RBZ by one or more international financial institutions.
Bond coins shall be construed accordingly.
“The principal Act is amended by the insertion in part VI (bank notes and coinage) for the following section after section 44A.
“The Minister may, by notice in a statutory instrument, prescribe that a tender of payment of bond notes and coins issued by the bank that are exchangeable at par value with any specified currency other than Zimbabwean currency prescribed as legal tender for the purposes of section 44A shall be legal tender in all transactions in Zimbabwe to the same extent as that prescribed currency,” read the gazette.
According to the Gazette, the bond notes and bond coins will be deemed to have been prescribed by the Minister.
“The tender of payment of bond notes issued by the RBZ shall be legal tender in all transactions in Zimbabwe as if each unit of bond note is exchangeable for one US dollar.
“Every one hundredth part of a unit of a bond note shall be deemed to be equivalent to and exchangeable for one US cent,” read the SI.