You can put my face on the Z$50 if you like

So it looks like Zimbabwe is planning a ten-bagel currency reform (and apparently that they have managed to find an alternative supplier of banknote paper and printing software to do so). Brings me back to something I was planning on writing about very early on in this project - the fact that, whoever ends up being in charge of Zimbabwe, they are going to have to deal with the hyperinflation, and my plan for doing so.

Basically the trouble is that all the recipes for curing a hyperinflation require you to have a strong and functional state. You can do it Israeli-style - with strict and firmly enforced price controls, or you can do it Argentinean style - by introducing a currency board. But in either case, you need to make it stick. And that doesn't look very possible at the moment - although the Zimbabweans[1] certainly need and deserve such a government, it would be nice to get rid of the hyperinflation in the near term, in the hope that this would facilitate a transition to more stable government without an economic collapse or civil war.

The only other way to control a hyperinflation is actual dollarisation a la Ecuador, but this doesn't seem practical to me. Zimbabwe has about a third of the GDP of Ecuador, but it doesn't have any material reserves of dollars at all, or any other hard currency. What it needs is something similar to dollarisation, but on the basis of a locally available fiat money standard.

And thus I suggest that Zimbabwe might as well have a go with free banking. One of the curios of the Zimbabwean economy is that it still has a significant presence from UK commercial banks (Barclays Zimbabwe, a subsidiary of Barclays plc is the largest, with Standard Chartered not far behind). Not very well informed UK journalists often discover this fact and then write ill-informed articles about "propping up Mugabe" (the reality is that neither company has made a cent in profit in Zimbabwe for about five years, but both of them have correctly assessed that they would hardly be doing the Zimbabweans a favour by destroying their domestic banking system. They don't "make loans to the Mugabe regime", they hold excess deposits (which are substantial as there aren't many viable commercial lending propositions in Zimbabwe) in short term government bonds.

Both BBZ and SC have substantially better credit ratings than the Zimbabwean state and justifiably so, and they have more of an interest in maintaining sound money in the long term than the Zimbabwean state too. They certainly don't have any interest in printing a note with twelve zeroes on it. Why not let them print banknotes and treat them as legal tender? There's my plan for monetary reform; doesn't work for most hyperinflationary countries as the local banking system is usually about as weak as the state but Zimbabwe is a special case.

[1]Finally got tired of the "Zimbabwegians" joke!