Financial Technology, Digital Currency and Monetary Policy in Zimbabwe

Abstract

The recent wave of financial innovation that has followed the financial inclusion strategy adopted by the Reserve Bank of Zimbabwe in 2015 poses a serious challenge to the national payments system and the conduct of effective monetary policy in the country. Despite the resultant reduction in financial frictions in settling domestic financial transaction, the possibility of creating new endogenous money in the economy should be closely monitored, and the Reserve Bank should consider making comprehensive national payment systems reforms that are consummate with changing dynamics in the globalized financial systems while considering adopting digital currency given that its hegemony on monetary creation is nearing its terminal. If this is not expediently, adequately and timely considered, new risks to monetary policy coordination and hence financial stability will follow, reversing all the gains realized during the initial stages of the financial inclusion strategy in Zimbabwe.