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Zimbabwe makes yuan legal tender

Early last week, Zimbabwe government officials announced an agreement with the Chinese government for that African nation to designate the Chinese yuan as its official currency. This development has been almost totally ignored by U.S. media, but has received wide coverage in the rest of the world.

In return for the forgiveness of $40 million of non-interest bearing debt owed by the Zimbabwe government to China’s government, the yuan will be designated as Zimbabwe’s legal tender.

Zimbabwe could effectlvely become a Chinese colony.

Zimbabwe could effectlvely become a Chinese colony.

Western officials are trying to downplay the long-term impact of this change but emphasizing the practical difficulties of introducing the yuan into circulation in Zimbabwe.

After suffering hyperinflation, culminating in the issue of $100 trillion notes, Zimbabwe’s prior currency failed in January 2009. For five years there was no official legal tender in the nation. Foreign currencies, especially U.S. dollars, euros and South Africa rand filled the void for circulating money. Until now, little Chinese yuan have been in circulation.

Zimbabwe has tried to reintroduce its own currency, promising to redeem former outstanding currency at the rate of 35 quadrillion (35,000,000,000,000,000) Zimbabwean dollars for U.S. $1 Unfortunately, that government’s finances are so weak that no one wanted the new monetary issue.

What that means is that the transition to having the yuan circulate as everyday currency in Zimbabwe is going to take a while. However, I expect the change to occur sooner than Western analysts and government officials want the public to believe.

China already has its own military installation in Zimbabwe. It has provided significant armaments, including jets and tanks, to that country’s military forces. It is not out of the question that Zimbabwe could effectively become a Chinese colony.

Such a move would make a lot of sense for the Chinese government. China is trying to expand the use of its currency worldwide as an expression of growing economic clout. Having the yuan officially designated as legal tender in other nations, even if it is not yet used by residents in everyday commerce, adds to China’s aspirations for the yuan to grow as a world reserve currency.

At the same time that China is expanding its global economic influence, it is also reducing the international usage and influence of the U.S. dollar. To the extent that foreigners become more aggressive at sending U.S. currency and Treasury debt back to Washington, the U.S. government will be forced to deliver goods and services, American real estate, or ownership in American companies in return. Such moves would immediately increase the U.S. government’s budget deficits, further harming the U.S. economy.

With so much to gain beyond the mere symbolism of having the yuan declared as legal tender in an economically minor African nation, I would not be surprised to see the Chinese government expand what I will call the “yuan sphere.”

Learn more about past coins of Ireland in the Standard Catalog of World Coins, 1801-1900, 8th Edition.

Learn more about past coins in the Standard Catalog of World Coins, 1801-1900, 8th Edition.

Prime targets would be financially troubled nations. In Latin America, is there a possibility that Venezuela, Ecuador or Nicaragua (where a Chinese billionaire has formed the consortium to construct a new canal to displace the Panama Canal) could be enticed to join the yuan sphere?

There are several other African governments that might welcome the financial relief in return for adopting the yuan as legal tender in their nations. There are also potential targets in the Far East, with Myanmar/Burma coming to mind.

Russia announced Nov. 27 that it would displace some of the other currencies in its central bank reserves (where U.S. dollars and euros now make up the bulk of total reserves) with Chinese yuan. Three days later, the International Monetary Fund Executive Committee voted to add the yuan to its basket of reserve currencies in its Special Drawing Rights as of September 2016.

Now with Zimbabwe adopting the yuan as legal tender, the Chinese government is hammering the U.S. dollar from multiple directions. That is not good news for people who keep their wealth denominated in U.S. paper assets such as stocks, bonds and currency.

Patrick A. Heller was the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He is the owner emeritus and communications officer of Liberty Coin Service in Lansing, Mich., and writes “Liberty’s Outlook,” a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at Other commentaries are available at Coin Week ( His radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at

This article was originally printed in Numismatic News Express.
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