Earlier this week Techzim published an article directed at CABS, seeking clarification on some new headings on their online portal. This was after some CABS customers reached out to us worried after they noticed a new subheading titled ‘Local Currency Account’ on their online portals.
Naturally people were worried about that ‘Local Currency’ subheading and what made it worse was that there were rumours circling on social media that the RBZ wanted to introduce a new currency. The bond note is not currency and so by new currency that would mean a new Zim dollar. That rumour was quashed by RBZ deputy governor Kupukile Mlambo.
CABS reached out to Techzim to give the ‘factual’ position and to ease people’s minds. They want to reassure their customers that they have not changed their system since dollarisation. If you only recently noticed the two different subheadings, Local Currency Account and Foreign Currency Account, it is probably just because you were not paying attention says the bank. It has been like that ever since 2009.
Why the split into Local and Foreign Currency accounts?
The bank says this is in line with industry standards. International core banking systems are configured to cater for local and foreign currency accounts. Do not read too much into it.
Do we have a local currency?
We do not have a local currency. The US dollar is configured in our banking systems as one of the currencies and is treated as the local currency. That is why the Local Currency account has USD as the currency. We are in a multi-currency regime and all the other currencies that are not the USD are treated as foreign currency i.e Rands, Pounds etc
There is to be no distinction between the US dollar and the bond notes and the RBZ prohibits opening a separate account for bond notes. The local currency account remains the USD account whether funded by US dollars or bond notes.
If you have cash in US dollars and deposit it with the bank it is credited (or is it debited) to your USD account (the local currency account.) If you deposit bond notes they are credited to the same account, the local currency account as when you deposit in USD. The bank is not allowed to create a separate acount for the bond notes.
So if you decided to withdraw from that local currency account you funded with US dollars you will not necessarily get US dollars. The money can be withdrawn in any legal tender in this country and that includes bond notes, that is a directive from the RBZ.
The same applies if you received a payment from abroad in US dollars or another currency. You will not get that exact currency but will be able to withdraw in any legal tender, including bond notes. It will depend on choice (your choice) or availability. I think we can safely assume the US dollar will not be available, it then means practically you will get the bond notes.
So there you have it. CABS does not have separate accounts for bond notes as the law does not make a distinction between the bond note and the USD. There is no new currency on the way. The local currency account is actually a USD and/or bond account. It was not created in anticipation of an imminent new currency.
2 comments
“The bank says this is in line with industry standards. International core banking systems are configured to cater for local and foreign currency accounts.”
That in itself is the problem local currency what local currency exists methinks someone at the bank is not stating that maybe its for accounts held by foreign entities, diplomats, ngo workers etc.
So using this explanation .it means that the foreign currency account will never have anything ? NO!!!