The decision to separate real time gross settlement (RTGS) foreign currency accounts from actual United States dollar accounts is beginning to pay dividends amid indications that deposits for the latter have now shot up to about US$600 million.
This was said by Reserve Bank of Zimbabwe Deputy Director for Economic Research Dr Nebson Mupunga yesterday during a breakfast meeting organised by the Employers’ Confederation of Zimbabwe (Emcoz) in Harare.
Dr Mupunga said it became critical to separate RTGS and actual US dollar accounts to deal with the rising demand for physical US dollars when depositors were depositing RTGS into their accounts.
But after protests over the separation of accounts from citizens who felt short-changed considering that their deposits were US dollar denominated, the nostro foreign currency accounts are doing well, in a move that preserves value for depositors.
“In the same account, we were depositing RTGS and US dollars, there was pressure in terms of the actual US dollar,” said Dr Mupunga.
“That is why as the Central Bank we took the decision to separate the accounts so as to preserve value and so as to attract those with actual hard cash to deposit in the banking sector and this has actually started paying dividends as you see.
“Now, nostro FCA deposits are on an increase to around US$600 million from maybe around $130 million.”
The RBZ introduced that policy on accounts in mid-October last year. Dr Mupunga said the jump in nostro FCA deposits is largely attributed to rising confidence in the financial services sector by individuals and corporates.
“So we are witnessing that confidence is now coming back into the financial sector. “People are now having confidence (in the banking sector) and these are dividends of the deliberate policy to separate the RTGS and nostro accounts,” said Dr Mupunga.
The country’s foreign currency deposits are at their highest in several years. On announcing the policy to separate the accounts, central bank Governor Dr Mangudya said they wanted to encourage exports, diaspora remittances, banking of foreign currency into the nostro FCA accounts and eliminate the core-mingling or dilution effect of RTGS balances on foreign currency accounts.
The relationship between the two categories of FCA accounts is 1:1. The RBZ kept the accounts at 1:1 to preserve value for money for the banking public and investors during the transition to a more market based foreign currency allocation system that shall be implemented once economic fundamentals are appropriate.
In support of the measures and to enhance sanity in the foreign currency market, the RBZ organised a US$500 million nostro stabilisation guarantee facility with the Afreximbank, to provide nostro account holders assurance that foreign currency will be readily available on demand.
The reported jump in nostro FCA deposits is expected to tickle other previously sceptical depositors to open such accounts.
The breakfast meeting ran under the theme, “State of the Economy and its Implications on Business and Investment”. Herald
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