
Zimbabwe's plan to use China's currency - rmason
https://www.washingtonpost.com/news/worldviews/wp/2015/12/23/zimbabwes-curious-plan-to-adopt-chinas-currency/
======
interesting_att
China has become a significantly better partner for African countries than the
West can ever hope to.

Having spent some time in international development, the stories are the same:
Western loans are always tied towards 'education', which barely makes a dent
when you figure out how much corruption there is on both sides of African and
Western governments. Chinese funds are often for critical projects, which have
clear measurable impacts, like roads and dams. In return, China gets access to
Africa's plentiful resources.

~~~
codesushi42
Did you even read the article? You know, the part where China is providing
aide to and voicing their support for Robert Mugabe, one of the world's worst
dictators. How is that good for Africa?

~~~
woah
Bad guy, but I think the point here is that dams and roads are useful, and
will continue to be useful through many possible future regime changes. The
western conception of good goverment mostly seems to be granted to those who
are useful to the west.

~~~
Blahah
More than just useful, roads are a huge enabler of local economies. Many rural
areas in Africa are so poorly served by roads that it is impossible to build
any decent size of business there without access to a lot of starting capital.
Even if a lot of the money disappears, having it tied to infrastructure
deliverables is a win for the population.

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UshZilla
On the one hand, there is nothing inherently wrong with the growth of an
alternative to the USD as a global market currency, there are good arguments
in favor of diversifying that function anyhow.

The dark side is that China has a history of being very good at economic
subjugation in Africa. This feels a bit like a "lender of last resort"
scenario, with a lot of contingencies and costly terms.

[http://www.newyorker.com/news/news-desk/china-in-africa-
the-...](http://www.newyorker.com/news/news-desk/china-in-africa-the-new-
imperialists)

~~~
tamana
China is the latest, but subjugating Africa has been a worldwide pastime.

~~~
themartorana
Well yeah, but the same can be said of any continent at some point in human
history.

~~~
jkaunisv1
But it can be said in particular of Africa in the more relevant and recent
hundred years or so. Especially in the context of the comment that sort of
loosely implied China was alone in subjugating Africa, in the present day.

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lisper
Heh, I was just in Zimbabwe. The US dollar is the de facto standard currency.
Even the ATM machines dispense dollars.

~~~
tim333
Cambodia where I'm almost at does the same - dollars from the ATMs. Growing 7%
a year. Maybe outsourced currency can work as long as you don't let everyone
borrow loads and end up as Greece.

~~~
toomanybeersies
The problem with Cambodia being pegged to the USD is that they are subject to
the whims of the US economy, rather then in line with the local, regional
economy.

Cambodia would be much better off using a neighbour's currency than the USD.

~~~
seanmcdirmid
Really? Let's see, we got the Baht, Dong, and...kip (laos is very dollarized
also, though). None of those are particularly appealing. You could argue for
the Baht maybe.

The only reason the Cambodians are using dollars anyways is (a) no trust for
the riel, and (b) a peacekeeping operation in 1993 injected a lot of dollars
into the economy, and the people just went with it. It doesn't get anymore
organic than that!

~~~
sdm
You're leaving out the SGD which would be the natural choice for an ASEAN
member and on very solid footing.

~~~
seanmcdirmid
Singapore is a city state. I don't think they want to be involved in letting
other countries use their currencies! Really, the economy you borrow your
currency from has to be huge to support that, so there are really only a few
choices: USA, Europe, maybe Thailand could (but it is still quite small),
maybe Australia, and of course...China (but RMB doesn't float, so a non
starter). Dollars have stability that is on par with gold (or even better,
recently), so why not just go with that?

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myohan
"In recent months, some Zimbabwean economists had argued that the country
should increase its use of the Chinese currency in a bid to get around U.S.
sanctions."...hmm other dictatorships may follow suit...

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imron
_considered the Chinese version of the Nobel Peace Prize_

Not by any Chinese, or by anyone who knows anything about it.

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joevsthevolcano
"Six months ago Zimbabweans were told that they would be able to exchange bank
account balances of up to 175 quadrillion Zimbabwe dollars for just 5 U.S.
dollars – a heartbreaking sum, given that it was many people's life savings."

~~~
awl130
that's just embarrassing. for your currency units to get up to 175 quadrillion
(i don't even know how many zeros that is) means you've faced extended periods
of hyperinflation. it's like when you have an Excel error in your balance
sheet model and your cash balances increases exponentially. except this is IRL
for zimbabwe.

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dools
Anyone who follows the work of Randall Wray[1] and Bill Mitchell[2] knows this
is a terrible idea. Relinquishing sovereignty of your currency (or pegging it
to another currency or commodity) only narrows domestic policy space.

[1]
[http://m.youtube.com/watch?v=i35uBVeNp6c](http://m.youtube.com/watch?v=i35uBVeNp6c)

[2] [http://www.amazon.com/Eurozone-Dystopia-Groupthink-Denial-
Gr...](http://www.amazon.com/Eurozone-Dystopia-Groupthink-Denial-
Grand/dp/1784716650)

~~~
mapt
Right. For a functioning economy with a functioning government, functioning
central bank, and functioning currency. But that is not Zimbabwe in the
2000's.

Zimbabwe became a dystopian cliché of hyperinflation and societal breakdown,
with 80% unemployment and 100% inflation _per day_. It is the current example
we use when we summon up the absurdist "wheelbarrows of currency" imagery.
Basically, they were limited to a barter economy, with a thick layer of
authoritarian interference in what became a very limited system of production
and distribution of goods & services.

To create a currency union that's sustainable, you have to commit to a fiscal
union (where there is stable net wealth transfer from New York to Nebraska
through things like social security), and/or to a very stiff amount of labor
mobility & remittances (where internal migration to the site of available
employment is as common as in the Dust Bowl). The EU did not have enough of
the latter (for a bunch of reasons), and chickened out on the former; In that
case failure was unavoidable, and credit availability simply delayed an
inevitability.

You _can_ give up 'monetary sovereignty' in a long-term stable manner and
sustain a functioning economy if you're willing to do these things. The United
States did. We have whole regions that would be depopulated without social
security, Medicare, and welfare to keep the population alive without its
manufacturing base. We have abundant internal migration.

But Zimbabwe is a whole other sort of thing. They didn't relinquish much of
anything when they gave up their currency; They had to build a new economy
from the foundations on up.

~~~
paublyrne
_To create a currency union that 's sustainable, you have to commit to a
fiscal union_

I have come to agree with this. I was a supporter of the Euro and Emu since
the 1990s, but I think I've been convinced that trying have a single currency
without full fiscal union is folly.

You should choose to either have balkanised currencies, or a federal financial
bucket, meaning the richer countries subsidise the poorer ones.

We went with Option C in Europe, and I don't have a lot of confidence that the
Euro can survive in the long run in the current system.

~~~
HiLo
Agreed. I simply can't imagine what would happen if our federal fiscal policy
was left up to the 50 states individually. Jesus that would be bad. Texas, my
personal and favorite example, would go from an economic powerhouse to unable
to support its economy, ever, if anything went south, pun intended.

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johnm1019
Reading the recent history of Zimbabwe's (soon to be previous) currency makes
Bitcoin look tame.

~~~
dorianm
Those 100 Trillion dollars bills are quite epic:
[http://www.ebay.com/itm/Zimbabwe-100-Trillion-
Dollars-X-5-Pi...](http://www.ebay.com/itm/Zimbabwe-100-Trillion-
Dollars-X-5-Pieces-PCS-2008-P-91-UNC-Prefix-AA-/271478509549)

~~~
foobar2020
I bought some of these absurd notes to give tips in bars, or to light cigars.
Sounds cheap, but always makes everyone laugh. Definitely recommend :)

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douche
Sad. Rhodesia was once one of the strongest economies in Africa.

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HiLo
Of course, the headline is misleading, as per usual...

From the article:

"By 2008, foreign currencies such as the U.S. dollar and the South African
rand had become de facto currencies thanks to a booming black market. The
following year, the government announced that it would officially allow
businesses to use these currencies, effectively abandoning the Zimbabwean
dollar.

The new agreement would add the yuan to the list of currencies used for public
transactions, and the Zimbabwean government said it would encourage its use."

~~~
dang
Ok, we s/adopt/use/'d the title.

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Kinnard
I think this officially marks the end of Dollar Hegemony:
[https://en.wikipedia.org/wiki/Monetary_hegemony#American_mon...](https://en.wikipedia.org/wiki/Monetary_hegemony#American_monetary_hegemony)

~~~
rgovind
Can you please elaborate?

~~~
Kinnard
Dollar Hegemony, ELI5 version: [http://falkvinge.net/2011/06/17/the-imminent-
dollar-collaps-...](http://falkvinge.net/2011/06/17/the-imminent-dollar-
collaps-explained-to-an-8-year-old/)

