Currency Is not confidence

Apr 09, 2024

Zimbabwe changed its currency overnight. Once again, many asked the same question: will this finally end hyperinflation?

Currency stability matters. It affects prices, wages, savings, and the confidence people have in tomorrow. But experience has taught us something uncomfortable. A new currency does not create stability on its own.

Inflation is not caused by money alone. It is the outcome of deeper conditions: inconsistent fiscal policy, weak institutions, corruption, low productivity, limited investment, and political uncertainty. When these conditions persist, no currency can carry their weight for long.

In Zimbabwe, fluctuations in our currency reflect more than exchange rates. They reflect trust. Trust in policy. Trust in institutions. Trust that rules will hold tomorrow as they do today.

Without that trust, people price risk into everything. Businesses hesitate. Workers demand survival wages. Investors stay away. Informal systems grow because formal ones no longer feel safe. Inflation becomes a symptom, not the disease.

This is why overnight changes rarely work. They treat the instrument, not the environment.

Economic performance is what ultimately gives a currency value. Productivity. Diversification. Functioning markets. Predictable policy. Institutions that do what they say they will do.

If Zimbabwe’s resources and wealth are to benefit its people, the focus must shift from announcements to capacity. From resets to reliability. From currency experiments to rebuilding confidence across the system.

Stability is built slowly. Through coherence. Through transparency. Through institutions that hold under pressure.

That is harder work than changing a note. But it is the only work that lasts.