The Reserve Bank of Zimbabwe is, according to the Financial Gazette, to introduce United States Dollar linked Bonds.

Now these aren’t to be confused with actual currency like that failed attempt to have a US$ placeholder they tried a few years back. These are bank bonds:

“A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower that includes the details of the loan and its payments. Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations. Owners of bonds are debt holders, or creditors, of the issuer. Bond details include the end date when the principal of the loan is due to be paid to the bond owner and usually includes the terms for variable or fixed interest payments made by the borrower.”

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Investopedia

These are just IOUs, the Reserve bank is in essence borrowing money with these using these bonds. A bit of chatter on social media showed folks were losing sleep thinking version 2 of the ‘bond note‘ is coming.

 

Goods and services are most likely being quoted in US$ even those needed by the government. This is one avenue by which they can raise forex, the hope is that this is to meet their many obligations (the stand-off with civil servants comes easiest to mind).

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