Thursday, 12 July 2007

Real Value Unit to stabilise the economy on the way.

Most people realize that the situation in Zimbabwe is beyond politics at the moment. This cannot be left to go any further.

Brazil very successfully employed the Unidade Real de Valor. It is not a theory. It is a fact. It is not mine. I did not come up with it. It is a proven and very successful accounting practice used by Brazil and explained in Zimbabwe by the Brazilians to Zimababweans a few months ago.

Two items are required: a non-monetary index unit and a daily rate between that stable non-monetary index unit and the ZimDollar.

Zim already has the "stable" non-monetary index unit. It is the USD price of every non-monetary item in Zim.

I know the USD is a monetary item. I know.

The USD is 2% away from being a 100% stable non-monetary unit. I think that is acceptable in Zim´s current hyperinflationary chaos.

The fact that the USD is an immediately fully understandable and fully credible subsitute for a full non-monetary index makes it very acceptable in Zim.

So, the only item that needs to be generally agreed is the daily rate to be applied by everyone. I would suggest that it should be the Old Mutual Implied Rate for the USD in Zimbabwe. It is freely available to everyone every working day of the week. It is unambiguous and definite. The current rate can be used during the day with the closing price as the rate for the day. There is only one closing price. No ambiguity. One single price. Available to everyone everywhere with internet access.

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