Zimbabwe's currency crisis and the 100 trillion dollar note

Back in the day when they changed the name of the country from Rhodesia to Zimbabwe, the Zimbabwe Dollar (ZWE) was worth USD$1.47 . But at current google it, you will be surprised.
Zimbabwe's central bank says banknotes from its old currency, which collapsed and was discarded years ago because of runaway inflation, can be exchanged for American dollars. But 100 trillion Zimbabwean dollars will fetch only 40 U.S. cent.

Zimbabwe in 2009 abandoned its currency for a system dominated by the U.S dollar and the South African rand when inflation hit 230 million percent. Back then, even street hawkers refused to accept a $100 trillion dollar note that was issued.

Zimbabwe has experienced a precipitous collapse in its economy over the past five years. The purchasing power of the average Zimbabwean in 2005 has fallen back to the same level as in 1953. For people in extreme poverty, a collapse like this translates directly into sickness and death. We conservatively estimate that persistence in the economic shock will cost the lives of at least 3,900 Zimbabwean children per year—about half the infant death toll from HIV/AIDS. The government blames its economic problems on external forces and drought. We assess these claims, but find that the economic crisis has cost the government far more in key budget resources than has the donor pullout. We show that low rainfall cannot account for the shockeither. This leaves economic misrule as the only plausible cause of Zimbabwe’s economic regression, the decline in welfare, and unnecessary deaths of its children.







Zimbabwe, once a vibrant and diversified economy, had been a hope for Africa’s future. Today, it is a country in deep crisis and the signs of collapse are everywhere. The economy has contracted in real terms in each of the past five years, inflation is in triple digits, the local currency has lost 99% of its value, and almost half of the country faces food shortages. Unsurprisingly, up to one-quarter of the population has fled the country. Many of the ‘costs’ of the recent economic collapse in humanitarian terms are evident. We assess here, first, the relative impact on incomes for the average Zimbabwean citizen. Second, we also estimate the additional hidden costs in lost lives from the crisis due to medium-term income effects.
Zimbabwe abolished its national currency in 2009 after, according to International Monetary Fund estimates, inflation surged to 500 billion percent in 2008 and the Zanu PF lost its parliamentary majority. The country is currently operating a multiple currency system, with the USD being the predominant currency. Although it does not have an official agreement with the United States Federal Reserve to use its currency, the Government conducts all its business using the USD.





Zimbabwe’s economic crisis can only be overcome if hyperinflation is stopped. The only way to do this rapidly is to replace central banking — namely, the Reserve Bank of Zimbabwe (RBZ) — with a new monetary system, argues internationally renowned banking and finance economist Steve H. Hanke in a new study released by the Cato Institute, in conjunction with AfricanLiberty.org.


"Zimbabwe’s hyperinflation is destroying the economy, pushing more of its inhabitants into poverty and forcing millions of Zimbabweans to emigrate. The source of Zimbabwe’s hyperinflation is the Reserve Bank of Zimbabwe’s money machine. Any one of three options (dollarization, a currency board, or free banking) can rapidly slash the inflation rate and restore stability and growth to the Zimbabwean economy," writes Hanke in "Zimbabwe: Hyperinflation to Growth.".

Hope zimbabwe Recovers Soon........