Currency Regime Transitions in Zimbabwe: Charting a Path Through Dollarization, De-dollarization, and Mono-currency Reform

Abstract

This paper examines Zimbabwe’s protracted monetary challenges by analyzing four currency regime trajectories: dollarization, de-dollarization, re-dollarization, and Mono-currency reform. It seeks to extract empirically grounded lessons from international experiences to inform Zimbabwe’s pursuit of a stable, credible, and context-sensitive currency regime. Building on the author’s prior publications and professional experience in Zimbabwe’s financial sector, along with an extensive body of comparative literature, this study situates Zimbabwe’s currency transitions within global debates on monetary sovereignty, inflation control, and institutional credibility in emerging and post-crisis economies. The paper adopts a qualitative, comparative methodology, synthesizing evidence from Latin America, Eastern Europe, and Sub-Saharan Africa. It examines the sequencing of reforms, the role of institutional capacity, and the macroeconomic outcomes associated with various currency regime transitions. The analysis finds that successful transitions are underpinned by institutional credibility, fiscal–monetary coherence, and carefully sequenced reforms, often reinforced by external anchors. Countries with genuinely autonomous central banks, transparent policy frameworks, and sustained fiscal commitments undertaken in good faith tended to achieve more durable monetary stability. By contrast, premature de-dollarization in the absence of foundational reforms contributed to policy reversals and renewed currency instability. The study offers actionable insights for policymakers, central banks, and international financial institutions engaged in sovereign lending and monetary design. It also contributes to academic debates on the institutional and policy conditions required for credible currency regime management in structurally constrained economies. By presenting a structured synthesis of currency regime transitions, the paper advances the literature on monetary reform and provides evidence-based guidance for managing complex currency choices and restoring monetary credibility in Zimbabwe and comparable contexts.