University of South Africa professor of finance Daniel Makina said events of the past few years and the subsequent dollarisation of the Zimbabwean economy have taken away some of the RBZs core activities. With the painful experience of the Zimbabwe dollar still fresh in everyones mind, it is going to take even longer to restore public confidence in a national currency and the institutions associated with it, Makina said in a document prepared for the United Nations Development Fund (UNDP)s Comprehensive Economic Recovery in Zimbabwe Working Paper Series.
Use of the Zimbabwe dollar was suspended early this year to make way for a basket of multiple currencies in a move largely motivated by a desire to rein in rampant inflation which had soared to more than 600 billion by the end of 2008. Makina ruled out a quick return of the Zimbabwe dollar, insisting that it may take time to wipe away painful memories of the past five years when the local currency became a source of anguish for business and individuals. A more acceptable approach for the moment might be to convert the central bank to an independent authority responsible for financial statistics and financial regulation, he said.
He added: Once a determination has been made on the new role of the RBZ, changes must be addressed through a constitutional amendment of the Reserve Bank Act that confers independence to the new establishment so that parliament has direct oversight over it, thus reducing the scope for interference by the Executive. Makinas proposal came as Finance Minister Tendai Biti had just gazetted a new law aimed at clipping the powers of under-fire RBZ governor Gideon Gono who is accused of single-handedly ruining Zimbabwes economy through his policies.
The Reserve Bank of Zimbabwe Amendment Act, which proposes an overhaul of the central bank operation, will see Gono referring most key decisions to a nine-member board of directors or the Minister of Finance for approval. Under the Bill, Gono will no longer have the sole right to set Zimbabwes monetary policy and would be guided by a proposed monetary policy committee.
The committee will determine the monetary policy of Zimbabwe, including the setting of limits on open market operations by the RBZ as well as ensuring price stability as defined by the governments inflation target set out in the national budget. It will also be responsible for the determination of interest rates in line with the governments economic policies and targets for growth and employment.
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