Adopting currencies

Posted: 21st October 2012 by admin in Remittance methods

In most normal cases, countries have their own currencies.  However due to political and economical reasons, other countries end up adopting foreign currencies as their own.  In Zimbabwe they have had to use multi currencies, one being the South African rand and the United States dollar.  Reason being that their own currency had been devalued several times such that in the end a solution had to be worked out.  This resulted in the Reserve Bank of Zimbabwe adopting  two currencies.

Advantages

– economic transactions are easier

– it has also aided in development of poor countries because of the high value in the adopted currencies

– stabilises the economy which relieves tension amongst political parties and the affected masses within that country

– lowers inflation and interest rates

– eliminates the risk of devaluation

Disadvantages

– does not solve all economic or political problems

– originators of the currency can hold you at randsome for using their currency

– at times people have to maintain low standards of living

– countries can live in debt as they default on payments

In the case of Zimbabwe it has made life easier.  Individuals can now have basic commodities in their shops.  Salaries have improved and at least there is hope.  People in foreign countries can send funds to them and they are assured that standards of living have improved.  About the country having its own currency again, that is still unknown.