n Journal of Strategic Studies : A Journal of the Southern Bureau of Strategic Studies Trust - Did the Reserve Bank of Zimbabwe Charter contribute to hyperinflation? A critical review
|Article Title||Did the Reserve Bank of Zimbabwe Charter contribute to hyperinflation? A critical review|
|© Publisher:||Southern Bureau of Strategic Studies Trust|
|Journal||Journal of Strategic Studies : A Journal of the Southern Bureau of Strategic Studies Trust|
|Affiliations||1 Nelson Mandela Metropolitan University and 2 Nelson Mandela Metropolitan University|
|Publication Date||Jan 2012|
|Pages||9 - 50|
The purpose of this article is to critically review the reserve bank of Zimbabwe charter supplemented with face to face interviews to assess the effects of hyperinflation and the financial system three years after it was brought to a halt. Central bank independence is characterised by insulation from influences and pressures emanating from public-elected government officials and a low inflation rate environment. A more independent central bank has a higher prominence for price stability and any other stated objective has the effect of reducing central bank independence. A central bank that is free from political pressure is able to assist with fiscal discipline through preventing the government from engaging in inflationary deficit spending, thus imposing austerity and stability on the economy.
Our findings were that the RBZ Act condones endless financing of government budget deficits. It lacks a primary objective of financial and price stability. As regards the survey of consumer finances, it is clearly demonstrated that the effects of the hyperinflation continues long after the event itself. Firms are under capitalised, households need to re-establish savings. Pensions and insurance policies are all wiped out. Incomes are low. However, the financial environment is much more stable and more conducive for long - term planning.
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