Ncube Points To Cryptocurrency As An Economic Solution

Zimbabwe’s new Minister of Finance has been in office for less than a month and he is already going head-to-head with the Reserve Bank of Zimbabwe (RBZ).

Mthuli Ncube has come out in support of the cryptocurrency industry which is against the views of the Central Bank and says that one possible solution to address Zimbabwe’s economic meltdown is to fall back on cryptocurrency.

Zimbabwe has been in the hole for the last few years now. Shortage in cash and a decline in the local currency value are two of the main problems faced by the government.

Both of these can be traced to the depletion of foreign currency in the country's banks as the number of exports has declined along with the over issuance of treasury bills that were aimed at financing the government.

The result is that cash is hard to find locally and the shortage has hurt the economy. Local banks have instituted a withdrawal limit which makes accessing cash a whole lot harder for locals. This has caused a loop in which locals have stopped entrusting local banks with their cash – making the liquidity crunch even worse.

This has also caused border towns in Zimbabwe to see an influx of visitors as they seek to access international banks which gives them access to cash.

Ncube Versus The Central Bank

Ncube is very positive about the use of cryptocurrencies. He currently promises to RBZ to open up to cryptocurrencies.

In a statement, Ncube said

Zimbabwe should be investing in understanding innovations and often central banks are too slow in investing in these technologies. But there are other countries which are moving faster. If you look at the Swiss central bank they are investing in-and understanding bitcoin

The problem is that RBZ has taken a very strong anti-crypto stance for some time now. The bank has released a circular pointing out that cryptocurrencies are not legal tender in Zimbabwe and that they could possibly be used for illegal activities. To protect the integrity and safety of the country's financial system, the RBZ has asked financial institutions to not deal in cryptocurrencies.

A formal ban on cryptocurrencies was also issued but Zimbabwe's high court had it repealed. However, the ban was enough to encourage crypto exchanges to move on to more welcoming markets. If Ncube succeeds in convincing the RBZ to be more open to cryptocurrencies, it would be a dramatic reversal to the current situation and a potential solution to the economic crisis in the country.

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