ZiG: Zimbabwe’s New Gold-Backed Currency Blighted by Trust Issues
The Southern African country has
attempted to introduce a new currency six times in the past 15 years to replace the Zimbabwean dollar. Each attempt has failed, resulting in huge losses in savings for people.
What Is the ZiG?
In 2009, the Zimbabwe government legalized the use of several foreign currencies, including the U.S. dollar and the British pound, in everyday trade. The administration made the decision in an attempt to tame monthly inflation of
79.6 billion percent at the time.
Since then, however, Zimbabweans have been caught in a vicious cycle where a surrogate local currency is used to sponge away their U.S. dollar deposits before being decommissioned for a new currency.
Announcing the ZiG, short for Zimbabwe Gold, on Apr. 6, Reserve Bank of Zimbabwe governor John Mushayavanhu
said:
“Banks shall convert the current Zimbabwe dollar balances into the new currency which shall be called Zimbabwe Gold (ZiG) to foster simplicity, certainty, and predictability in monetary and financial affairs.”
Remarkably, the new central bank governor’s tenure kicks off the ZiG era. His predecessor, John Mangundya, came with ‘bond notes’, pegged one-to-one with the U.S. dollar at the time, to ease cash shortages in 2016.
Mushayavanhu, who only became central bank governor on Mar. 28, 2024, revealed the ZiG is backed by $575 million in gold, foreign currency reserves, and other minerals. The new currency derives its name from a central bank-issued, gold-backed digital token now known as GBDT.
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