Zimbabwe Dollar to be phased out and replaced with US dollar

[bilby]

...at an exchange rate of Z$35,000,000,000,000,000 to US$1

Buying a single US dollar for cash would require a bundle of 350,000 of the largest denomination Zimbabwean banknotes ever printed.

Good news for Zimbabwean savers though; they are allowed to convert a bank balance of up to Z$175,000,000,000,000,000 at the new rate (ie up to US$5).

The Zimbabwean dollar will cease to be used at the end of September - at which point its value will finally reach zero, an benchmark it has been rapidly approaching for some time.

(Source).

 

[RavenSky]

This is an area I have no knowledge of, and never even thought about - is it even legal for a country to appropriate the use of another country's currency?

 

[bilby]

This is an area I have no knowledge of, and never even thought about - is it even legal for a country to appropriate the use of another country's currency?

As long as they don't print any banknotes, and instead 'import' them in exchange for goods and/or services, there is nothing illegal about it - it is just trade. Joe has rice and wants greenbacks; Sam has greenbacks and wants rice. It doesn't matter where in the world Joe and Sam are living.

Basically the US dollar has been one of the few worthwhile media of exchange in Zimbabwe for years - the South African Rand has also been in wide use.

People are prepared to give you the bread they baked, or do work for you, or give you a bottle of beer, in exchange for greenbacks. They won't do the same in exchange for the worthless paper the Zimbabwe central bank issues.

All this is doing is formalising the de facto situation, and recognising that the $Z has finally reached a value close enough to zero to make that it's official exchange rate.

Lots of countries worldwide use the US$ or another regional currency, as well as or instead of their own.

Some peg their own currency to another, stronger currency - the French Polynesian Franc is at a fixed exchange rate to the euro, for example. They have their own notes, but they are effectively promissory notes for payment in hard currency.

 

[RavenSky]

I was aware that some other countries informally use foreign currency; just not the official formal nature of this situation.

 

[Draconis]

well it's better than using toilet paper

 

[DrZoidberg]

This is an area I have no knowledge of, and never even thought about - is it even legal for a country to appropriate the use of another country's currency?

Money can be traded like any commodity. What is in fact happening is that Zimbabwe is just giving up on having it own currency. They´re making it completely open and optional which currency will be used in the country. Which is not unique. When United States was first founded they didn´t have their own money. It wasn´t until after the Civil War that USA introduced the US dollar. Before that they often used British currency, or any really. As well as proprietary bank notes issued by US banks.

 

[Nice Squirrel]

This is an area I have no knowledge of, and never even thought about - is it even legal for a country to appropriate the use of another country's currency?

Yes. The US Dollar is the most commonly used currency of other nations, but the Euro is catching up: https://en.wikipedia.org/wiki/International_use_of_the_U.S._dollar

Current users of the dollar are:
East Timor
Ecuador
El Salvador
Marshall Islands
Federated States of Micronesia
Palau
Panama
Zimbabwe

Another good article:
https://en.wikipedia.org/wiki/Currency_substitution

 

[whichphilosophy]

This is an area I have no knowledge of, and never even thought about - is it even legal for a country to appropriate the use of another country's currency?

As long as they don't print any banknotes...........

For sure there will be plenty of banknotes printed in Zimbabwe

 

[whichphilosophy]

well it's better than using toilet paper

Toilet paper is more valuable.

- - - Updated - - -

This is an area I have no knowledge of, and never even thought about - is it even legal for a country to appropriate the use of another country's currency?

This happens all the time.

 

[Keith&Co.]

Lots of countries worldwide use the US$ or another regional currency, as well as or instead of their own.

I think there's a Kurt Vonnegut novel that takes place in such a country? The American is surprised to see the old, old, old US money being exchanged as if it was fully natural. The problem being that there's no American Bank on the island, and thus no one is taking old money out of circulation to replace it with new stuff. So you get dollars shrunk in size from wear and about the texture of pocket lint...

 

[whichphilosophy]

This is an area I have no knowledge of, and never even thought about - is it even legal for a country to appropriate the use of another country's currency?

They already use US dollars as is own currency is worthless

http://www.wsj.com/articles/SB10001424052748703730804576314953091790360

- - - Updated - - -

This is an area I have no knowledge of, and never even thought about - is it even legal for a country to appropriate the use of another country's currency?

Yes. The US Dollar is the most commonly used currency of other nations, but the Euro is catching up: https://en.wikipedia.org/wiki/International_use_of_the_U.S._dollar

Current users of the dollar are:
East Timor
Ecuador
El Salvador
Marshall Islands
Federated States of Micronesia
Palau
Panama
Zimbabwe

Another good article:
https://en.wikipedia.org/wiki/Currency_substitution

The EURO has tumbled during the past months so a dollar is regarded as more reliable. Maybe that will change.

 

[dismal]

I've been to several countries where dollars were preferred to the local currency, though in those cases they were not legal tender. It's somewhat surprising to see Zimbabwe government do this because they have relied so heavily on money printing in the past.

Should be better for the people.

 

[Bronzeage]

well it's better than using toilet paper

Trading in a consumable commodity is the most accurate measure of an economy, especially in a situation where banking statistics have become meaningless.

It gives great incentive to use as little toilet paper as possible and keep as much as possible in storage.

 

[RavenSky]

This is an area I have no knowledge of, and never even thought about - is it even legal for a country to appropriate the use of another country's currency?

Yes. The US Dollar is the most commonly used currency of other nations, but the Euro is catching up: https://en.wikipedia.org/wiki/International_use_of_the_U.S._dollar

Current users of the dollar are:
East Timor
Ecuador
El Salvador
Marshall Islands
Federated States of Micronesia
Palau
Panama
Zimbabwe

Another good article:
https://en.wikipedia.org/wiki/Currency_substitution

Very interesting, thank you! (I love it when I learn new stuff here )

 

[Derec]

well it's better than using toilet paper

Unless you are Venezuelan.

 

[Sarpedon]

Its very common. what it means is that a country is giving up its right to control its own currency, in favor of borrowing the stability of another country's economy. It has advantages and disadvantages. For countries that have shown themselves irresponsible fiscally, it is more advantageous. Many EU countries are starting to see the disadvantages. Stability encourages people to make investments and save money. Lack of control of currency robs a country of the ability to fiddle with their interest rates and do other things that can effect the economy (favorably, if skillfully managed [not an issue here])

It has no disadvantage to the country hosting the currency. It may bolster the value of the dollar, by causing more people to buy it. However, countries like Zimbabwe are so poor that I doubt they'd buy enough dollars to see any effect on its value. Probably everyone who has any money in Zimbabwe long ago made the switch to some form of foreign currency.

 

[Warpoet]

Not hard to figure out the logic behind this move. Quite sad to see how thoroughly Zimbabwe has collapsed, all while Mugabe sits in his palaces, living on and on forever and sucking the country dry.

There's a very interesting history behind Zimbabwe (formerly Rhodesia). Some documentaries on YouTube that shed light on the subject:

[YOUTUBE]https://www.youtube.com/watch?v=0DuNhsLR9y0[/YOUTUBE]

[YOUTUBE]https://www.youtube.com/watch?v=0S2NKlMW0vc[/YOUTUBE]

Sad, but interesting.

 

[Loren Pechtel]

This is an area I have no knowledge of, and never even thought about - is it even legal for a country to appropriate the use of another country's currency?

Where's the crime? Now, if they were to print US currency we would have an issue with it but they're simply using it. This is one of the ways a country that royally fucks up it's currency can fix the situation--simply adopt somebody else's.

 

[Loren Pechtel]

I've been to several countries where dollars were preferred to the local currency, though in those cases they were not legal tender. It's somewhat surprising to see Zimbabwe government do this because they have relied so heavily on money printing in the past.

Should be better for the people.

Yeah, in most anyplace with shitty local currency the locals will favor the greenback. It's generally illegal to give them that greenback, though.

What they are doing in Zimbabwe is simply recognizing reality--the Zim $ is worthless anyway. One of Mugabe's mistakes--he tried to fund the government with the printing press.

 

[whichphilosophy]

This is an area I have no knowledge of, and never even thought about - is it even legal for a country to appropriate the use of another country's currency?

Where's the crime? Now, if they were to print US currency we would have an issue with it but they're simply using it. This is one of the ways a country that royally fucks up it's currency can fix the situation--simply adopt somebody else's.

They could not of course print US currency unless it was fake.