Zimbabwe recently launched a new gold-endorsed currency, ZiG. The new development is part of an ongoing economic reform designed to stabilize and strengthen the national economy. The move is anticipated to encourage domestic and foreign investments and cushion the nation against severe currency fluctuations and hyperinflation which the country has grappled with for decades.
The introduction of ZiG, therefore, marks a significant development in the government’s efforts to establish a robust and secure financial system. It also aims to promote financial inclusion by providing banking services to the largely unbanked rural population.
Stabilizing Zimbabwe’s economy with gold-backed ZiG
This initiative is expected to contribute towards the economic and social development of Zimbabwe.
The conversion from existing bank accounts to ZiG has commenced with an initial value ratio of 13.56 to $1, pegged as a potential solution to the depreciated Real Time Gross Settlement Dollar (RTGS). The Reserve Bank of Zimbabwe, in its official announcement, reveals that the ZiG banknotes will come in denominations of 1, 2, 5, 10, 50, 100, and 200 and expects complete circulation by the end of the month.
The new currency will likely address the liquidity crunch and the persistent cash shortages in the country, providing relief to local businesses and consumers. These notes have advanced security features to combat counterfeiting and safeguard the currency’s integrity. The RTGS or Zimdollar currency, introduced in 2019, had failed to meet its economic boost objective, causing a 55% inflation and further crippling the economy and its populace.
The negative experience of colossal hyperinflation under former President Robert Mugabe has left some Zimbabweans apprehensive of ZiG’s introduction possibly triggering a similar economic crisis. Nevertheless, despite ZiG’s launch, doubts persist about its stability and utility for trade due to a report by the central bank indicating that 80% to 85% of transactions still involve foreign currency.
