Back in May Zimbabwe’s Finance Minster and his monetary accomplices promised the country that they would be releasing higher denominations in the form of $10 and $20 notes. While the $10 note came on time as promised, the $20 note did not come during the first week of June as promised, instead it only started making appearances on social media last week. People wondered what had happened with some claiming the central bank was playing chicken.

Well, wonder no more. The Minister of Finance has helpfully explained the delay, it was not due to logistic problems as we thought, it was because, wait for it, the government is intent on managing money growth supply. A bizarre claim indeed we will explain why shortly first here is his statement in the Chronicle:

At the moment we have allowed citizens to use free funds (forex), as a way to also manage the growth of money supply.
So, we said we will bring it ($20 note) but we need to ease pressure and we want to manage the introduction of whatever currency we have so that again we don’t balloon growth of money supply.
We use the swapping mechanism where we are swapping RTGS balances for cash and we have kept that approach and that’s the right approach to do it.

A contradiction

This is strange because when he announced the new denominations he claimed that the new notes would not affect money supply as they were simply replacing RTGS balances with real notes. So which is it?