Zimbabwe "Bond Paper" Notes Are Bonds?

Working in Zimbabwe this week, I went and withdrew some money from the ATM (yes, they have ATMs here).  Which bill do you think had stored deep in my bag from America and which do you think came from the ATM?  

A relatively clean US $5 circulating itself in Zimbabwe

This is completely typical of Zimbabwe.  This and power failures...to the point that it's more surprising when they do have power.  

So I started to do a bit of research, and what I found is pretty incredible.  For those who don't know, the Z$ was the official currency of Zimbabwe from 1980 to 2009.  Today, it's officially the US dollar, but as you can probably guess by the picture above, they don't print it here, so the money makes it's rounds; rounds that aren't complete until they pass through a half dozen bras bras.

So from a simple Z$10 note having 39 siblings, from 3 separate removal of zeros (25 zeros total), here's a brief history of the Zimdollar...

THE NEW NOTES
After Zimbabwe gained it's independence in 1980, the first national dollar was announced to replace the Rhodesian dollar at par.  It wasn't until full year later, however, that the red Z$10 was introduced in conjunction with the 50c and Z$1 coins.  At the time, the Rhodesian coins maxed at 20c, so these were made to outlive those of their past.

• Notes created: 1
  
• Coins created: 2
  

The New Notes

The First Four Notes

THE FLORA SERIES
In 1980, you could buy 1 USD with 63c from Zimbabwe.  It was in 1983 that the 2 reached parity after an official devaluation of 16.5%.  While Georgia was having its great flood of ’94, the rate of exchange has escalated to Z$8 for 1 USD.  By this time, Zimbabwe had introduced a Z$50 and Z$100 which commonly became known as the Flora Series, as the notes were pastels and their numbers overshadowed indigenous flowers.  Just in case people were looking to forge, the Flora Series came with additional security and handling features.  During Clinton’s presidency, the RBZ was busy removing the previously introduced Z$20, Z$10, Z$5, and Z$2 notes.  The latter was replaced by a Z$2 coin.

• Notes created: 6 
  
• Coins created: 6
  

The Flora Series

THE RED Z$500 NOTE
The best part about this note is its nickname, Ferrari, given for its quick acceleration out of the pocket.  The Ferrari was introduced right as the dot-com bubble was quieting down.  It was introduced with a Z$5 coin as well (a penny to a dollar…).  It wasn’t until a nearly a year later that Zimbabwe was officially deemed “in a state of hyperinflation” as their year-over-year rate of price increases surpassed 100%.  People speculated on when the Z$1,000 note was going to be introduced, but were quelled as to not increase inflation even more than it already was.  In the cold winter of 2003, Zimbabweans queued up to withdraw what they could --- what turned out to be less than $5 USD.

• Notes created: 8
  

The Z$500 Ferrari

THE BEARER CHEQUES
It should come as no surprise that the governor went “on leave pending retirement” in 2003.  The newly installed governor Charles Chikaura issued a “quick-fix” by issuing high value travelers cheques.  But there were major issues concerning the transferability between bearers with said travellers cheques, so Governor Chikaura determined he’d issue bearer aka “burial” cheques on 23-Sep-2003.  These bad boys were printed on recycled Z$50 notes and has high highness’ signature.  A cheeky Z$390 billion was injected into the already suffering economy.  Needless to say, just a few weeks after this clown show, a new governor was appointed effective immediately.

• Notes created: 10
  

Z$100,000 Burial Cheque

THE NEW $500 AND $1,000
While the burial cheques debacle was happening, Finance Minister Murerwa announced that since the current Ferrari’s were being “hoarded,” they were being withdrawn and a new Z$500 note was being issued (makes perfect sense…).  These new notes were printed just 3 days after the burial cheques came into the market, followed by a Z$1,000 note just a week later.  That was October 1, 2003, and these new notes worth a grand in Zimbabwe dollars would net you a $1.25 USD…about half a gallon of gas at the time.

• Notes created: 12
  

The New Z$1,000 Note

THE 1 CENT NOTE
Here’s a curveball.  On the 1st of August 2006, 14 bearer cheques were introduced, ranging from 1c to Z$100,000.  It’s important to note this happened because 3 zeros were removed from the currency.  The government, as if not having bigger fish to fry, spent half their time on Operation Zuvarabuda --- to find the hoarders of bearer cheques --- and the other half on “Zeroes to Heroes” --- a campaign which, despite its drastically different meaning from what I’ve known it to mean, essentially divided everything by 1,000, so your bread costs “only Z$85” now, rather than the previously outrageous price of Z$85,000!  When these new 14 bearer cheques were introduced, it would cost you Z$600,000 for every $1 USD.  That’s one bitch of an exchange rate. 

• Notes created: 26
  
• Zeros removed: 3
  

THE NO GAP NOTES
As if the government had not fucked up enough at this point, they then misprinted a Z$100000 note; these notes were missing the traditional gap denoting a thousand and were shortly reissues.  One of these notes was worth US $400 at the official rate when issued, and would sell on the black market for about 40 cents on the dollar.  The Z$5,000 and Z$50,000 were issued in 1-March-2007.

• Notes created: 29
  

THE $200,000 NOTE
Five months after the Z$5,000 and Z$50,000 notes were introduced, the Z$200,000 note was put on the market at an official rate of US $800 but only a parallel rate of US $1!  There were 250,000,000 of these notes issued --- not $250M worth, but 250M notes.  One week before Christmas that same year, Gideon Gono announced that the Z$250k, the Z$500k, and the Z$750k notes would be introduced and that the Z$200,000 would be demonetized on 31-Dec-2007.  That means that these newly injected 250M notes had a lifetime of only 5 months.

• Notes created: 34
  

 

THE $750,000 NOTE
No surprise here, but Zimbabwe was first on the international front to introduce the Z$750,000.  These notes were printed on recycled Z$1,000 notes with the “7” in a different font than the “50,000.”  Shops now had to use calculators as multiplying 75 times anything gets a bit difficult.  Where they got the money to buy a calculator beats me.

 

THE AGRO-BILLS
The Agro-Bills hit the city after the country folk had already been using them and came about as a reaction to the now perpetual shortage of cash to buy crops such as tobacco and cotton.  They were launched in conjunction with the Z$500,000,000 note in May of 2008.  The Agro-Bills were cheques in the amount of 5 billion, 25 billion, 50 billion, and 100 billion Z$.  The country of Zimbabwe officially had a “billion” denomination.  Congratulations.

• Notes created: 39
  

 

THE BOND PAPER NOTES
The national currency was once again replaced on 1-Aug-2008 --- with 10 additional zeros were removed --- when the RBZ issues some notes that had been hanging out in their vault over the past year.  The RTGS rate increased 3,333% over the course of 1 month from this most recent issuance.  The country “needed” higher denomination notes, but --- I love this --- Giesecke & Devreint had been pressured by the German government to discontinue supplying paper to Fidelity Printers.  The last note these suppliers provided the paper for was the Z$10,000.  The country had to source new printers.  The notes from this point in time to the “dollarization era” were printed on low quality “bond paper” out of the Art Corporation’s archaic Fine Paper Mill.

• Noted created: 40
  
• Zeros removed: 13
  

THE $50 BILLION NOTES
Exactly after the Z$200,000 note was given its 2 week warning back in 18-Dec-2007, another 9 notes ranging between Z$1,000,000,000 and Z$100,000,000,000,000 (that’s 100 trillion) were issued which added another 5 zeros to the currency.  On my birthday in 2008, the US dollar was being exchanged for a single 10 trillion dollar note --- or, if you had it, 2 trillion but in 50 billion notes.  By the end of 2009, the Z$50 billion were used on commuter buses not to pay for a 50c fare, but as change for said 50c fare, being Z$3 trillion, or 3 bundles of 20 notes.  February 2009, not surprisingly, saw another 12 zeros removed from the currency.

• Notes created: 49
  
• Zeros removed: 25
  

 

THE $100 TRILLION NOTE
Unfortunately Zimbabwe cannot lay claim to having the highest denomination in the history of money, but it can lay claim to having the most zeros on a single note --- 14.  Way to go, guys.  They broke the record previously held by the Serbians in 1993, a mere $500 billion note with only an embarrassing 11 zeros.  If you're curious, the record for the highest denomination goes to the Hungarian 100 million B-Pengo issued in 1946.  It was equivalent to 100 quintillion.  Those sneaky folks used the “B” as a 3x multiplication factor.  To put that in perspective, if they hadn't, the note would have been home to 20 zeros.  And as a backup, a 1 milliard B-Pengo (1 sextillion = 21 zeros) was printed, but never was put into circulation.

 

THE $5 OCTILLION NOTE
If you were to add the 25 zeros removed from the Zimdollar over its 28-year history and issued a note in its high denomination in the final series (500), you’d get a Z$5 octillion note.  That’s on par with the Hungarians back in 1946.  But what Zimbabwe had changes the story drastically: an electronic banking system.  Much higher denominations existed electronically --- the aforementioned notes were just physical copies.  From 1-Aug to 18-Nov 2008, the Old Mutual Implied Rate rose from Z$51 (respectable) to and let me get this right --- Z$654,546,232,677,340,000!  All the while the cash rate increased from Z$15 to a cheeky Z$900,000. 

So, you tell me, just how many zeros were there?  I don’t know; I stopped doing the math.  All I know is the currency artists had to be making pretty good money back then --- get it, pretty good money?

Official, black market, and OMIR exchange rates 1-Jan-2001 to 2-Feb-2009. Note the logarithmic scale!

 Sources: The Zim Calendar by New Zanj, Wikipedia, BankNoteNews.com, RBZ.co.zw