Lars Christensen observes that in Zimbabwe a company called EcoCash, which allows customers to bank through their cell phones, is helping to solve the country’s shortage of coins. During Zimbabwe’s hyperinflation of the previous decade, local-currency coins disappeared because they were worth more as metal than as money, and as inflation accelerated it made no sense for the government to mint more. Zimbabweans used quickly depreciating notes for small change. Eventually, as the country became de facto dollarized, local currency became worthless. Zimbabwe then officially allowed people to use foreign currencies. The U.S. dollar is popular, but there are few U.S. coins in circulation because the cost of transporting them from the United States to Zimbabwe is high. The government has apparently not thought to let local private mints step in, as George Selgin has documented that they did in England about two centuries ago. Electronic transactions through cell phones provide an alternative private-sector solution. By the way, Steve Hanke clearly laid out the dollarization option for Zimbabwe in a paper more than half a year before it actually happened, and in the same paper he mentioned free banking as another option for monetary reform.
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