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Zimbabwe Central Bank Issues New Bank Notes, Recycles Coins

Confusion and long lines at banks accompanied the Zimbabwean central bank's issuance of new bank notes on Friday as financial institutions, businesses and individuals grappled with a new currency regimen following the elimination of 10 zeros from nominal values.

The Reserve Bank of Zimbabwe is issuing new notes for 500, 100, 20 and 10 dollars, and coins for one dollar, 50 cents, 20 cents and 10 cents - the latter recycled from the family of coins that was in general circulation eight years ago.

The Reserve Bank said bills in circulation would remain legal tender until January 31, 2009, instead of December 31 of this year as it had initially stated.

Notes to be pulled out of circulation include the Z$100 billion note - already a collector's item being sold on E-Bay. Inflation has been officially pegged at 2.2 million percent, but some economists estimate that at this point it is running at 100 million percent.

Sources in Harare said most automated teller machines were out of commission as they must be configured to handle the new bills. One Harare consumer said he was able to withdraw the recently increased maximum daily amount of 2 trillion Zimbabwe dollars - equivalent to 200 redenominated Zimbabwe dollars - from Stanbic Bank despite long lines.

Many said they had not seen the new bills, but some members of the public had old coins which they were able to put back into use - if stores accepted them.

One resident of Bulawayo, the country's second-largest city, said he was turned away from several shops where retailers were adjusting cash registers to the new values.

The state-controlled Herald newspaper said the conversion or revaluation of accounts would be done between Aug. 9 and Aug. 13, such that a customer account with 5 trillion dollars in it would continue to show that value until the process has been completed.

The ongoing currency shuffle brought back memories of a similar operation two years ago in August 2006 – but this time observers said the RBZ was moving more cautiously.

In 2006 the central bank called in the old currency over a one-month period, which seriously disrupted the economy as individuals and businesses rushed to put old notes into banks as officials questioned the origin of the funds, often suffering arbitrary cash seizures.

For a look at the currency operation and what it means to Zimbabweans, reporter Patience Rusere of VOA's Studio 7 for Zimbabwe turned to economist Eric Bloch, an advisor to the central bank, and independent journalist Jonah Nyoni of Bulawayo.

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