Zimbabwe introduces gold-backed ZiG currency
The governor of the Reserve Bank of Zimbabwe (RBZ), Dr John Mushayavanhu, has unveiled a new structured currency called Zimbabwe Gold (ZiG).
This move is a part of a series of policy actions aimed at addressing growing inflation, unstable exchange rates, and restoring economic stability.
Dr. Mushayavanhu stated in his monetary policy statement that the country’s valuable metal reserves, which are primarily made up of gold, as well as foreign exchange reserves in the Nostro account will underpin the new currency.
“The structured currency that we are introducing as Zimbabwe is going to be backed by a basket comprising foreign exchange that we already hold in our nostril account, and precious metals that we are collecting as royalties from precious minerals that are being mined in this country. And we are holding these as reserves at the central bank and these comprise mostly gold.
“So, with effect from today (Friday) all banks shall convert the current Zimbabwe dollar balances into the new currency, which shall be called the ZiG.
“To foster simplicity, certainty, predictability in our financial affairs. The new currency will co-circulate with other foreign currencies in the country,” Dr Mushayavanhu said.
He stressed that all businesses are expected to change their pricing to ZiG with immediate effect.
“All domestic traders are expected to consistently modify their pricing systems in line with the current reforms.
“With immediate effect, prices for goods and services shall be converted using the conversion rate that I mentioned earlier on, and thereafter put it in ZiG for the transacting public’s convenience,” Dr Mushayavanhu said.
He also said:”Within seven days from today, all entities other than banks and MNOs are expected to have completed the configuration of their systems for direct business usage,
“On conversion, of all current Zimbabwe dollar balances, banks are directed to rename all the Zimbabwe dollar accounts as ZiG accounts. In other words, what used to be RTGS and operating under the RTGS platform is now ZiG.”
“All Zimbabwe dollar notes and coins, held by account holders, will be credited into the ZEIT accounts using the applicable conversion rate, conversion factor,
“The banks will continue to accept these deposits for a period of 21 days after today. The Reserve Bank has made special arrangements for those in the outlying areas who may not have bank accounts, and we have made arrangements for POSB and AFC commercial banks, and they will take their cash to these banks, and that cash will be converted to ZiG,
“However, if anyone is going to bring notes with above $100,000, we need to know where you got it and why you have been keeping it,” Dr Mushayavanhu said.
Reports say the new currency will be launched on April 8, 2024, with an initial exchange rate of 13.56 per dollar.
As reported by Bloomberg, the Zimbabwean Central Bank has made six attempts to create a sustainable currency since 2008, the year that the nation’s currency became worthless due to 500 billion percent inflation.
The Zimbabwean dollar is currently the second worst-performing currency in the world, having lost about 80% of its value on the official market this year. Inflation has accelerated noticeably as a result of this large change in the value of the currency, rising from 47.6% in February to 55.3% in March.
