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An Overview of the Economic Causes and Effects of Dollarisation: Case of Zimbabwe

Mediterranean Journal of Social Sciences

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Title An Overview of the Economic Causes and Effects of Dollarisation: Case of Zimbabwe
 
Creator Nkomazana, Lionel; Student, Vaal University of Technology
Niyimbanira, Ferdinand; Lecturer in Economics, Vaal University of Technology
 
Description Zimbabwe acquired its independence on 18 April 1980. Thereafter, its government introduced the currency known as the Zimbabwean dollar (ZW$) as an official currency, replacing the Rhodesian dollar in equivalence. At its inception, the Zimbabwean dollar had an exchange rate of one to 1.47 United States dollars (US$). However, according to Sikwila (2013:398), “by July 2008 its value had dropped to ZW$10 billion to 0.33 US$. This was fuelled by the substantial increase in money supply of ZW$20.5 trillion.” The increase led Zimbabwe to be the first hyperinflationary economy of the 21st century. This caused the abandonment of the ZW$ and the adoption of the US$ and other currency such as the Euro and the Rand. This paper discusses the various types of dollarisation before examining the causes and effects of adopting dollarisation as a way to eliminate hyperinflation, and the failure of the banking system to provide domestic currency to both firms and individuals. The paper is important to policymakers because it gives some recommendations on the subject in question, and suggestions for future research direction are indicated.
DOI: 10.5901/mjss.2014.v5n7p69
 
Publisher Mediterranean Journal of Social Sciences
 
Contributor —
 
Date 2014-04-30
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
—
 
Format application/pdf
 
Identifier https://www.mcser.org/journal/index.php/mjss/article/view/2459
 
Source Mediterranean Journal of Social Sciences; Vol 5, No 7 (2014): May 2014; 69
 
Language eng
 
Relation https://www.mcser.org/journal/index.php/mjss/article/view/2459/2427
 
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