Zimbabwe made gold legal tender and reintroduces gold standard

[pmbug]

ZiG is partly gold-backed, which begs the question, how much?

See point 162 in last quote in post #98:

Zimbabwe made gold legal tender and reintroduces gold standard

https://www.miningweekly.com/print-version/zimbabwe-central-bank-accumulates-almost-a-ton-of-gold-reserves-2024-02-13#:~:text=Zimbabwe%E2%80%99s%20central%20bank%20accumulated%20793%20kilograms%20%2825%2C000%20ounces%29,pay%20part%20of%20their%20royalties%20using%20the%20metal.

www.pmbug.com

 

[Peter89]

See point 162 in last quote in post #98:

Zimbabwe made gold legal tender and reintroduces gold standard

https://www.miningweekly.com/print-version/zimbabwe-central-bank-accumulates-almost-a-ton-of-gold-reserves-2024-02-13#:~:text=Zimbabwe%E2%80%99s%20central%20bank%20accumulated%20793%20kilograms%20%2825%2C000%20ounces%29,pay%20part%20of%20their%20royalties%20using%20the%20metal.

www.pmbug.com

"162. As of 5 April 2024, the Bank has reserve assets of USD 100 million in cash and 2,522 kgs of gold (US$185 million) to back the entire local currency component of reserve money which currently stands at ZW$2.6 trillion requiring full (100%) cover of gold and cash reserves amounting to US$90 million. The gold and cash reserve holdings currently with the Bank represent more than 3 times cover for the local currency being issued."

It says the ZiG is backed by gold & cash, i.e. the ZiG is by definition partly backed by gold.
Bank reserves assets - both the cash and the gold component - change in time, so nothing prevents the gold reserves to decrease in the future so much that de facto the ZiG could become only e.g. 10% backed by gold.



I miss something like "Each ZiG unit is 100% backed by gold"
And how about this one: "Each ZiG unit is redeemable against x grams of gold"
After all this is how a gold backed currency works

 

[searcher]

Zimbabwe Will Convert Annual Budget to Reflect New Currency​

Zimbabwe will convert its annual budget to its gold-backed currency, the ZiG, which went into circulation last month, Finance Minister Mthuli Ncube said.

“That should be ready at the end of the month, beginning of next month we will be able to show you the ZiG equivalent of the budget,” Ncube told lawmakers at the nation’s parliament in Mount Hampden.

More:

Bloomberg - Are you a robot?

 

[pmbug]

@Peter89 - I think your concern is largely echoed by everyone that is skeptical of the Zimbabwe government and RBZ. Words are cheap (even cheaper than fiat). Time will tell.

 

[Peter89]

@Peter89 - I think your concern is largely echoed by everyone that is skeptical of the Zimbabwe government and RBZ. Words are cheap (even cheaper than fiat). Time will tell.

... yes... probably I'm being to harsh on them...

They did a gigantic step towards sound money,
actually Zimbabwe is currently AFAIK the only country in the world with a currency which is officially - partly or not partly - backed by gold.

Well done Zimbabwe gov!

 

[searcher]

Zimbabwe to fine those not using official ZiG rate | Business

Zimbabwe will penalise individuals and companies which don’t use the prevailing official foreign-exchange rate of its new ZiG currency for transactions.

www.news24.com

 

[pmbug]

A serious shortage of Zimbabwe Gold (ZiG) has hit the market despite monetary authorities releasing notes and coins last month amid fears the crunch will affect aggregate demand.

The Reserve Bank of Zimbabwe (RBZ) started circulating ZiG notes and coins last monthend. The ZiG replaced the Zimbabwean dollar, which had lost three-quarters of its value this year.

A survey conducted by Standardbusiness last week showed that ZiG notes were not readily available through banks. Shortages were observed in various sectors including transport, supermarkets and the informal market.

The situation is causing disruptions to businesses.

“We do not have enough ZiG from the central bank,” economist Gift Mugano told Standardbusiness.

“The size of the money supply is about ZiG$90 million and the size of our economy is about ZiG$ 20 billion.

“So, the question is how does the government liquidate and expect to provide enough cash in the market when you have that small share of ZiG?

“The central bank has not printed enough ZiG.
...

More:

Cash shortages hit Zimbabwe

Cash shortages hit Zimbabwe

www.newsday.co.zw

Sounds like they did not execute the new currency introduction adequately.

 

[searcher]

Zim govt now wants mobile money services back - after blaming them for a currency crash | Business

Zimbabwe will allow mobile money agents, once blamed for fueling the collapse of its now defunct Zimbabwean dollar, to operate again to boost the use of its new gold-backed currency.

www.news24.com