Zimbabwe has a relatively well-developed financial sector, in sub-Saharan Africa, second only to that of South Africa. The Reserve Bank of Zimbabwe (RBZ) administers all monetary and exchange controls and is the sole bank of issue. The Zimbabwe Development Bank was established in 1983 as a development finance institution.
Five commercial banks, and ten merchant banks operate in Zimbabwe. Commercial banks include Barclays, Standard Chartered, Stanbic, the Zimbabwe Banking Corporation, and the Commercial Bank of Zimbabwe. Merchant banks include the Merchant bank of Central Africa, First Merchant Bank, Standard Chartered Merchant Bank, Syfrets Merchant Bank, National Merchant Bank of Zimbabwe. Commercial banks are obliged to maintain a statutory deposit ratio of 20%. The Post Office Savings Bank is an important savings institution. High inflation rates in the late 1990s prompted the government to print $250 million worth of Zimbabwean dollars in order to keep the state running, instead of depreciating the currency itself.
The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $2.4 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $3.3 billion. The money market rate, the rate at which financial institutions lend to one another in the short term, was 21.52%. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 57.2%.
The Zimbabwe Stock Exchange (ZSE), with floors in Harare, deals in government securities and the securities of many privately owned companies. The stock exchange opened in 1946. Until 1993, it was insignificant as a source of new capital, but the government allowed foreign investment through the ZSE, and by September 1995 the net foreign inflow exceeded US $125 million. In 1997, the value of shares traded more than doubled, but in 1998, there was an 88% decline in the value of shares traded because of social unrest and high interest rates. 2001 proved to be a banner year, however, with market capitalization at a soaring all-time high of just under $8 billion, and trading valued at $1.5 billion. The ZSE Industrial Index was up 158% for the year, at 46,351.9, despite the severe economic slowdown caused by President Robert Mugabe's policies.