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Zambia plans on criminalizing use of dollar
(MENAFN) The Bank of Zambia has initiated efforts to regulate the use of foreign currencies in domestic transactions, with a particular focus on curbing reliance on the United States dollar, according to reports from the country's news agency. The central bank is set to introduce new currency regulations through a statutory instrument to be issued by the minister of finance and national planning, aimed at mandating the use of the Zambian kwacha and its subunit, the ngwee, for all public and private transactions within Zambia.
Concerns raised by the Bank of Zambia highlight the detrimental effects of increased dollarization on the local economy. The practice, as noted by the central bank, undermines effective monetary policy implementation and places undue pressure on the exchange rate dynamics. A draft document released by the Bank of Zambia outlines severe penalties, including potential imprisonment and hefty fines, for individuals found using foreign currencies in local transactions, underscoring the seriousness with which authorities view this issue.
Francis Chipimo, the central bank's deputy governor for operations, addressed these concerns during a speech at a trade fair in Ndola, emphasizing the risks associated with dollarization. He explained that reliance on the United States dollar diminishes the efficacy of monetary tools in managing credit and liquidity risks, as dollar-denominated markets operate independently of the Bank of Zambia's regulatory influence.
Chipimo further highlighted the broader economic implications, noting that a dollarized economy diminishes the demand for and utility of the local currency, leading to persistent depreciation and reduced confidence in its role as a medium of exchange and store of value. The move by the Bank of Zambia underscores efforts to bolster the stability and sovereignty of Zambia's monetary framework amid challenges posed by external currency dependencies.
Concerns raised by the Bank of Zambia highlight the detrimental effects of increased dollarization on the local economy. The practice, as noted by the central bank, undermines effective monetary policy implementation and places undue pressure on the exchange rate dynamics. A draft document released by the Bank of Zambia outlines severe penalties, including potential imprisonment and hefty fines, for individuals found using foreign currencies in local transactions, underscoring the seriousness with which authorities view this issue.
Francis Chipimo, the central bank's deputy governor for operations, addressed these concerns during a speech at a trade fair in Ndola, emphasizing the risks associated with dollarization. He explained that reliance on the United States dollar diminishes the efficacy of monetary tools in managing credit and liquidity risks, as dollar-denominated markets operate independently of the Bank of Zambia's regulatory influence.
Chipimo further highlighted the broader economic implications, noting that a dollarized economy diminishes the demand for and utility of the local currency, leading to persistent depreciation and reduced confidence in its role as a medium of exchange and store of value. The move by the Bank of Zambia underscores efforts to bolster the stability and sovereignty of Zambia's monetary framework amid challenges posed by external currency dependencies.
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