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Politics : Liberalism: Do You Agree We've Had Enough of It? -- Ignore unavailable to you. Want to Upgrade?

To: grusum who wrote (108419)	7/23/2011 5:56:21 PM
From: lorne	1 Recommendation Read Replies (1) \| Respond to of 224757

'Repentent' Zimbabwe central banker to Geithner: Stop the printing presses Contrite Gono dispenses monetary advice Thursday, 21 July 2011 19:35 Chris Muronzi theindependent.co.zw CENTRAL Bank chief Gideon Gono had some curiously frank advice for US Treasury secretary Tim Geithner on printing money at a Zimbabwe Independent dialogue function in Harare this week. The US is hoping to raise the federal debt limit by the beginning of August this year to avoid another economic crisis. Gono’s advice was not without basis. The Reserve Bank governor has done it and seen it all. Until 2009 he had an unenviable appetite for printing money and stoking inflation. By the time government adopted multiple currencies, the legendary Weimar Republic’s runaway inflation was a non-event by comparison as a single Zimbabwe bearer’s bill was as high as Z$10 trillion. But Gono said his worry was broader than just stopping the Yankees from running the printing press as he did to finance a budget deficit come August, but given Zimbabwe’s economic reliance on the stability of the American currency, the US economic crunch could impact on Zimbabwe. “If that doesn’t weaken a currency I don’t know what will,” said Gono. “Get it from me; I have got experience in that. So if there is something that I can teach the world, it is free advice to the US and those countries that are relying on the printing press; don’t do it.” “Please my brother from the US embassy, take that message to the treasury secretary and say there is ‘some little bugger’ there who has a lot of experience. He says he loses sleep when he sees you printing (money), printing against a background where he has attached his economic fortunes on you.” Gono warns there is need to insulate Zimbabwe from possible US dollar-related shocks should the Americans choose to finance debt through printing money. “They (US) behave in the same manner I was behaving. At least I have repented. We cannot, after the global financial crisis that started in the US, have a continuation of printing money....why is China getting rid of US dollar stocks and buying properties? Therefore let us not be caught napping,” Gono said. This, Gono said, could present problems for Zimbabwe which relies on the stability of the unit. Zimbabwe’s banking sector was stable and attacked the International Monetary Fund’s template reports that always said the country’s banking sector was “vulnerable.” Asked by former Finance minister Simba Makoni why monetary authorities and government had been quiet on the Zimbabwe dollar account-holder balances, Gono replied his upcoming monetary policy statement would give direction on the matter. “Sometimes we use silence to manage the situation,” he said. Gono said Zimbabwe would only revert to its old currency once the economy had grown to sustainable levels. “Let me say that no self-respecting nation in the world can do without its own currency. Even some of those nations that have gone into common markets chose to keep their own currency. Britain is part of the EU but has decided to keep their pound sterling,” he said. “There are also times when it is necessary to step back and reconfigure yourself before you go about wanting your own currency and we are in that phase.” He defended local banks’ loan book sizes, saying loan to deposit ratios were largely in line with regional levels. Gono also had words of wisdom for the government: “Walk the talk on policy implementation.” He praised Zimbabwe for what he described as “elaborate and award winning” economic blueprints that fall short on implementation. “We fall short on the implementation table,” he said. The central bank boss said there was need to have both the macro and micro side of the economy working. Twenty of the 25 banking institutions in the country, excluding POSB which is regulated under a separate statute, had complied with the central bank’s prescribed minimum paid-up capital requirements by end of March, while 15 out of 16 asset management companies had complied with the minimum paid-up equity capital requirement of US$500 000 by end of June. “Going forward, the Reserve Bank is going to meet all undercapitalised banking institutions, together with their boards and shareholders, to determine the way forward on a case by case basis.” Although the banking sector was largely stable, Gono said protracted re-capitalisation processes of some banking institutions, tight liquidity conditions mainly attributable to volatile short-term transitory deposits and limited lines of credit, low savings owing to low salaries and wages, and low interest income against high operational costs, presented threats to the stability of the sector. Gono urged banks to promote a savings culture in the economy by offering meaningful deposit rates and lowering bank charges. Banks are relying on non-funded income such as bank charges to make money.