Zimbabwean economists including Phillip Haslam believe bitcoin is a viable alternative to the foreign currencies in circulation in the country as it brings several immediate advantages to Zimbabwe.
In an interview with the Institute For Security Studies (ISS), Haslam emphasized two important advantages and aspects of bitcoin which could allow Zimbabweans to adopt bitcoin without further sacrifices and risks:
- Bitcoin network’s ability to facilitate cross-border trades
- The decentralized nature of bitcoin
Ever since the Reserve Bank of Zimbabwe’s suspension of the Zimbabwean dollar and the authorization to use foreign currencies within the country, the government integrated several major reserve currencies including the Australian dollar, Sterling pound, CHinese yuan, euro and Botswana pula into its economy.
However, the variety of currencies within the country has created friction amongst merchants, businesses and individuals, causing great discomfort to the already struggling economy. More importantly, substantial differences in demand for certain currencies have made cross-border payments increasingly difficult, disallowing the facilitation of remittance payments for workers and employers.
Instead, economists like Haslam state that bitcoin could be the most practical alternative to these currencies and the failing monetary system of Zimbabwe, as it could solve issues that revolve around cross-border payment barriers and financial autonomy that exist within the country.
“We are very excited about bitcoin as a stable currency alternative. The thing about bitcoin is once you import it into the country, you don’t have the problem of the currency eroding and perishing like you have with notes. It’s a system that allows for privatised banking. Effectively, the bitcoin system is both a currency and international payments platform,” said Haslam.
More importantly, Haslam noted that the use of bitcoin will most likely increase the liquidity of its approved list of reserve currencies drastically, granting the people of Zimbabwe more financial freedom.
“‘If Zimbabwe establishes a privatised bitcoin national currency, if the market naturally went to a bitcoin type currency, as other currencies around the world indicate weakness with money printing happening, you’d have a whole lot of currency flowing into Zimbabwe. Zimbabwe would transform from a basket case to a global banking centre in a stable cryptocurrency. And that would be fairly quick,” he added.
One of the major issues with the Zimbabwean monetary or financial system is that regions and cities in the country depend on different reserve currency. For instance, workers in Harare, the capital city of Zimbabwe, could be paid in Australian dollars or Chinese yuan but their family could rely on the sterling pound, which may be the preferred currency in that particular region.
Since cross-border payments are virtually impossible to settle, workers in Harare would have to travel to an exchange, change their currencies into a particular reserve currency, travel down to their families and support their living.
Because of this inefficiency in the current financial system of Zimbabwe, local economists suggest that pushing bitcoin as the national currency of Zimbabwe could optimize time and costs for both businesses and individuals in the country.