The Reserve Bank of Zimbabwe (RBZ) has announced the introduction of a United States dollar denominated Savings Bond.

The ‘new’ bond will come alongside the existing RTGS dollar/ZWL, which was introduced in 2017 to “mop up excess liquidity.

Said RBZ governor Dr John Mangudya, while presenting the 2019 Mid-term Monetary Policy Statement today:

“In order to promote a savings culture and to provide reasonable return on FCA Nostro account deposits and USD cash held by individuals and firms, the Bank is with immediate effect, introducing USD-denominated Savings Bonds alongside the current ZWL$ denominated Savings Bonds.”

The US dollar Savings Bond will have the following features: (i) Interest rate of 7.5% per year; (ii) Minimum tenure of one year; (iii) Tax Exemption, in line with Government policy; (iv) Liquid Asset Status; (v) Tradable; and (vi) Acceptable as collateral for overnight accommodation by the RBZ.

Added Dr Mangudya:

“The interest rate on the ZWL$ Savings Bonds shall soon be reviewed to take account of developments on the domestic Treasury Bill market and to motivate banks to provide meaningful return on local currency deposits.”

At the beginning of this year, the central bank said the original Savings Bond had attracted $2 billion from the market, accounting for around 20 percent of all the real time gross settlement (RTGS) balances in the system at the time.