Staff Reporter

The Reserve Bank of Zimbabwe (RBZ) has made a strategic move to reinforce the country’s financial stability by increasing the statutory reserve ratio for foreign currency demand deposits.

In a statement, released yesterday, Dr. Mushayavanhu, the RBZ Governor explained that this adjustment is crucial for maintaining a stable financial system.

“The decision to increase the statutory reserve ratio is part of our ongoing strategy to maintain a tight monetary stance while ensuring the stability of the financial sector,” Dr. Mushayavanhu stated.

He emphasized that the higher reserves provide a solid cushion for banks to meet their obligations, which is vital for maintaining public confidence in the banking sector.

“By strengthening the reserves, we are ensuring that financial institutions are well-equipped to handle any liquidity challenges that may arise, thereby safeguarding the interests of depositors and the overall economy,” he added.

The increase in statutory reserves is one of several measures the RBZ has implemented as part of its broader effort to control inflation and stabilize the economy.

Dr. Mushayavanhu highlighted the significance of these developments in his 2024 Mid-Term Monetary Policy Review Statement.

“Our focus is on building a resilient financial system that can withstand economic shocks. The introduction of tradable Treasury instruments and adjustments in statutory reserves are key components of our strategy to foster economic stability and resilience,” he remarked.

He further noted that the increase in the local currency component of broad money indicates a rise in banking sector loans and advances.

“While we are maintaining a tight monetary stance, we are also ensuring that there is adequate credit available to support economic activity. Our goal is to strike a balance between controlling inflation and promoting sustainable growth,” Dr. Mushayavanhu explained.

Dr. Mushayavanhu reaffirmed the central bank’s commitment, stating, “We remain steadfast in our mission to safeguard the financial system and support the country’s economic goals through prudent and proactive monetary policies.”

As Zimbabwe continues its economic recovery, the RBZ’s measures are expected to play a pivotal role in maintaining financial stability and fostering long-term economic resilience.