In Zimbabwe, where worthless $100 trillion notes serve as reminders of the perils of hyperinflation, President Robert Mugabe is printing a new currency that jeopardizes not just the economy but his own long grip on power.
Six months ago, the 92-year-old announced plans to address chronic cash shortages by supplementing the dwindling US dollars in circulation over the past seven years with ‘bond notes’, a quasi-currency introduced this week.
According to the Reserve Bank of Zimbabwe (RBZ), the bond notes will be officially interchangeable 1:1 with the US dollar and should ease the cash crunch. The central bank also promised to keep a tight lid on issuance.
After a 2008 multi-billion percent inflationary meltdown caused by rampant money-printing, many Zimbabweans are skeptical. The plan has already caused a run on the banks as Zimbabweans empty their accounts of hard currency.
Inteal intelligence briefings seen by Reuters raise the possibility that the bond notes, if they crash, could spell the end of Mugabe’s 36 years in charge.
A Sept. 29 Central Intelligence Organization (CIO) report revealed the powerful army was as unhappy as the rest of the population with the new notes and had told Africa’s oldest leader to “wake up and smell the coffee.”
“Top security officers have told Mugabe not to blame them if Rome starts to bu,” the report said.
Reuters was unable to determine the author of the report. It is also unclear if Mugabe has seen the report, whose final audience is not specified. Mugabe’s spokesman did not respond to requests for comment, nor was the CIO available.
But the report offers a rare glimpse into the thinking of Mugabe’s security forces — the backbone of his power — and their conces about the implosion of what used to be one of Africa’s most promising economies.
“Mugabe was openly told that the bond notes are going to cause his downfall,” the report said.