Zimbabwe Introduces New Gold-Backed Currency Called ZiG
Zimbabwe has launched a new gold-backed currency called ZiG, short for “Zimbabwe Gold”, in a bid to stabilize its economy. The country has been facing economic turmoil for the past 25 years, with the latest move being an attempt to address ongoing financial challenges.
Central bank governor John Mushayavanhu unveiled the new notes, stating that the ZiG would be structured and set at a market-determined exchange rate. This currency replaces the Zimbabwean dollar, RTGS, which has lost significant value this year.
With annual inflation reaching a seven-month high of 55% in March, Zimbabweans have been given 21 days to exchange their old, inflation-affected notes for the new currency. However, the US dollar will remain legal tender, as it accounts for 85% of transactions in the country.
The new ZiG banknotes range in denominations from 1 to 200, with the introduction of coins to address the shortage of US coins. Mushayavanhu emphasized that the new currency would be backed by equivalent value in precious minerals, mainly gold, or foreign exchange to prevent devaluation.
Historically, Zimbabwe has had a mistrust of the central bank, dating back to the 2008 crisis when hyperinflation led to the printing of Z$10 trillion notes. Subsequent currency initiatives, such as the bond note, have faced challenges due to overprinting.
While the announcement of the ZiG has been met with subdued reactions, economists like Godfrey Kanyenze remain skeptical about the government’s ability to maintain financial discipline. The unveiling of the new currency coincides with the country’s struggle to cope with a severe drought that has severely impacted maize crops.
Overall, the introduction of the ZiG marks a significant step for Zimbabwe’s economy, but challenges remain in ensuring its stability and credibility moving forward. Stay tuned for more updates on this developing story.
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