WARNING: This is Version 1 of my old archive, so Photos will NOT work and many links will NOT work. But you can find articles by searching on the Titles. There is a lot of information in this archive. Use the SEARCH BAR at the top right. Prior to December 2012; I was a pro-Christian type of Conservative. I was unaware of the mass of Jewish lies in history, especially the lies regarding WW2 and Hitler. So in here you will find pro-Jewish and pro-Israel material. I was definitely WRONG about the Boeremag and Janusz Walus. They were for real.
Original Post Date: 2004-01-13 Posted By: Jan
From the News Archives of: WWW.AfricanCrisis.Org
Date & Time Posted: 1/13/2004 5:11:02 AM
Zim: Cash shortage as Banking Crisis worsens
Zimbabwe’s banks are in crisis, as the central bank struggles to curb rampant speculation in shares and property. Reserve Bank of Zimbabwe (RBZ) rules have sent interest rates soaring, choking off the flow of borrowed money into the markets. This has left many borrowers unable to pay their debts, hitting the fragile balance sheets of domestic lenders. Now, one-third of banks are reportedly unable to honour cheques, and six banks are suspended from daily clearing. To stave off the threat of a wholesale loss of confidence among depositors and investors, with catastrophic results for the wider economy, analysts now say the RBZ may have to back down. The current crisis results from attempts by new RBZ governor Gideon Gono – who took office last month – to close a loophole in interest-rate policy. Although inflation reached a high of 620% in November, legal restrictions have kept interest rates at or below 100%. This resulted in a negative real interest rates of 500% and above, making it hugely favourable to borrow money and invest it in any asset – most favourably property and shares, but also everything from cars to whisky.
In order to calm down this speculative bubble, Mr Gono has allowed banks to charge higher rates, with some now charging 500% and above. But this in turn has left many debtors unable to service their obligations, and banks with gaping holes in their balance sheets. The resulting liquidity crunch has produced a surge in the Zimbabwean dollar, as banks dumped their holdings of foreign currency in order to meet their local obligations. In the past three weeks, the Zimbabwean dollar has risen on the black market from 7,000 to the US dollar to about 4,500. Mr Gono has this week launched an auction system for legitimate official foreign exchange trading, which he hopes will help bring the official rate more into line with the black market. Restrictions on participation will probably prevent the official auctions from providing a true valuation of the Zimbabwean dollar, although analysts expect the rate to fall from its current fix of 824 in the US dollar to below 3,000.
Ultimately, says David Cowan of the Economist Intelligence Unit, Mr Gono may have to reverse his interest-rate policy in order to stave off a full-fledged run on Zimbabwe’s banks. At best, this may reinstate the speculative bubble that was in place before Mr Gono’s arrival. “But it’s the first crack in the wall,” says Mr Cowan. If property or share prices fail to reignite despite a new lowering of interest rates, the effects could be very widely spread. Negative real interest rates leave banks unable to attract sufficient levels of deposits, meaning that they will at some point run out of money to lend unless something significant changes. And with Zimbabwe currently being suspended from the International Monetary Fund, there is no prospect of money coming in from outside to prop up the system.
Source:BBC News
URL: http://www.zwnews.com/issuefull.cfm?ArticleID…br>