The Bank of Zambia has proposed a new series of guidelines that seek to outlaw the use of foreign currency, including the U.S. dollar, for local transactions. If finally approved, the document would establish harsh penalties for infringement, including jail time for up to ten years and hefty fines.
Zambia to Outlaw Use of Foreign Currency, Criminals Could Face Jail Time for up to 10 Years
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Zambia to Punish Illegal Use of Foreign Currency With Jail Time for Up to 10 Years
Zambia is advancing in enacting regulations to outlaw the use of foreign currency, including the U.S. dollar, in domestic transactions. According to local reports, a draft document released to the public by the Bank of Zambia includes measures in this regard, that seek to strengthen the use of the national fiat currency, the kwacha.
The document presented proposes to punish the use of currencies other than the Kwacha with jail time for up to ten years, and also establishes hefty fines for citizens violating these rules. These rules are expected to be formalized by the Minister of Finance and National Planning and might affect how Zambians and tourists conduct trade in the country.
The central bank’s Deputy Governor for Operations, Francis Chipimo, announced the upcoming enactment of these measures, directed to thwart the use of the U.S. dollar and the pernicious effect of a defacto dollarization in the country. At a trade fair, Chipimo stated that the inclusion of the dollar in the Zambian economy contributed to “hinder effective monetary and exchange rate policy management.”
He also remarked that an elevated reliance on the U.S. dollar increases risks for the economic and fiscal systems, as it diminishes the influence of the movements of the Bank of Zambia, given that dollar-denominated markets are outside the scope of the bank’s action.
The kwacha has been facing a rough year, having plunged to new lows against the U.S. dollar in May. Some expect the kwacha to continue declining, given the demand for dollars that the country needs to keep importing petroleum products.
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