STASHING cash in safe deposit boxes, which are commonly used to secure valuables, affects the smooth running of the economy as it diverts money from productive sectors, the Central Bank has said.
While the practice is legal, there are concerns it is increasingly being used to hoard cash.
“Channelling money through the normal banking system has greater micro and macro benefits,” said Reserve Bank of Zimbabwe Governor Dr John Mushayavanhu in a recent interview.
“On the micro level, economic agents can earn lucrative returns from banking for savings and time deposits.”
The Reserve Bank recently raised interest rates on deposits to promote savings among individuals and corporates.
Current regulations do not put a limit on the amount of cash individuals can keep in deposit boxes. According to the Banking Act (Chapter 24:20), banks are authorised to provide safekeeping services based on their own risk frameworks.
However, traders are still expected to deposit excess cash daily in accordance with the Bank Use Promotion Act (Chapter 24:24).
Improving savings and investment
The debate over deposit boxes highlights concerns over economic inclusion, trust and institutional performance.
“The unwavering and strong commitment of the Reserve Bank to continue walking the talk of prudent monetary policy management will consolidate the already growing confidence in the banking sector,” Dr Mushayavanhu said.
Reserve Bank of Zimbabwe
“We increased interest rates on savings and time deposits to a minimum of 2,5 percent and 4 percent for USD deposits and 5 percent and 7,5 percent for ZiG deposits, respectively. This aims to promote a healthy savings culture.”
However, the benefits are not just for individuals.
“On a macro level, depositing money into bank accounts as opposed to safe deposit boxes will improve savings and investment in the economy,” Governor Mushayavanhu added.
“Banks will be able to extend lending to individuals and companies with projects with positive returns for both plant and machinery and working capital purposes, thereby supporting economic growth and development.”
Using formal bank accounts, he added, helps to curb tax evasion and money laundering, among other offences. Banks ordinarily carry out know-your-customer or customer due diligence procedures that enable them to weed out suspected tax evaders and money launderers and report such activities to responsible authorities.
But the preference for safe deposit boxes by some indicates lingering concerns about the reliability of the banking system, which the central bank believes is a legacy issue.
“The proliferation of safe boxes is partly attributed to the perceived fear of losing value from past macroeconomic distortions and volatility,” Dr Mushayavanhu said.
“But the Reserve Bank has ably addressed this through the re-calibrated monetary policy framework of 5 April 2024, and subsequent monetary policy measures and interventions.”
Growing confidence
RBZ, however, believes that confidence is gradually returning. “Deposits into the formal banking system increased, including US dollar deposits, which rose from US$2,3 billion in April 2024 to US$2,8 billion as of 31 March 2025.
The holding period of funds in the banking sector has also increased, as evidenced by a significant fall in the velocity of circulation of local currency.”
Authorities say rising deposits indicate that people are comfortable keeping their money in banks “without fear of losing value”.
Ongoing efforts to maintain price and exchange rate stability are expected to further buttress these gains. Further, the positive real interest rate environment is forecast to promote a savings culture through returns on savings and time deposits.
Current efforts to promote digitisation and a cash-lite economy, including increased use of point-of-sale (POS) machines, are also projected to enhance the formalisation of the informal sector.
Economist and financial systems researcher Mr Tendai Munyoro said lingering memories of currency instability continue to influence public behaviour. “It is true that when money is banked, the economy benefits through increased liquidity, lending and even investment in public infrastructure indirectly,” Mr Munyoro said.
“However, trust is not built overnight. For many Zimbabweans, their caution is not just emotional; it is based on real past losses. Restoring confidence is as much a psychological and reputational challenge as it is a technical or policy one.”
The Reserve Bank’s commitment to a stable monetary regime, he said, is encouraging.
“Interest rates and macroeconomic figures are important,” he said.
“But people want assurance that tomorrow won’t bring another overnight currency switch or withdrawal freeze.”
Another economist, Dr Mercy Gutu, said, “Individuals and small businesses are using safe deposit boxes to manage liquidity outside of traditional banking hours or as a practical hedge against the unpredictability of the formal system”.
“It is a kind of hybrid trust; they still use banks, but they want a private fall back,” he said.
“People are risk-managing based on the options available to them. And in a country where many operate informally, financial fluidity, the ability to move, store and access money on one’s own terms, is critical.” – Herald Online
