Zimbabwe reportedly launches gold-backed digital currency. It was reported some time ago that the Zimbabwe government plans to launch a gold-backed currency, and right now the country has launched the coin. Continue reading to learn more about it.
Zimbabwe Launches Gold-Backed Digital Currency
A year after unveiling plans, the Reserve Bank of Zimbabwe (RBZ) has introduced its new digital currency backed by gold reserves, aptly named ZiG, short for Zimbabwe Gold. This move is aimed at bringing stability to the country’s economy and shielding citizens from the adverse effects of currency fluctuations and soaring inflation rates.
Announced by Central Bank Governor John Mushayavanhu, ZiG is poised to replace the struggling Zimbabwean dollar, which has been grappling with significant depreciation over the past year.
To facilitate the transition, citizens have been given a 21-day window to convert their old cash into the new currency, while the US dollar will continue to serve as legal tender for most transactions.
The Introduction of ZiG Includes the Issuance of New Banknotes in Various Denominations
The introduction of ZiG includes the issuance of new banknotes in various denominations, ranging from 1 to 200 ZiG, alongside the introduction of coins. These coins, backed by Zimbabwe’s gold reserves, are intended to address the shortage of US coins, which has resulted in unconventional practices like receiving change in sweets or chocolates.
Concerns Regarding the Sufficiency of Zimbabwe’s Gold Reserves
However, some experts have expressed concerns regarding the sufficiency of Zimbabwe’s gold reserves to effectively support the new currency and its susceptibility to fluctuations in gold prices.
While Zimbabwe’s gold deposits play a significant role in its economy, accounting for a considerable portion of the nation’s total exports. Neighboring countries on the other hand such as South Africa boast larger reserves, raising questions about Zimbabwe’s ability to safeguard its currency against external economic shocks.
Zimbabwe’s History of Grappling with Currency Instability
Zimbabwe has a history of grappling with currency instability, having abandoned its currency in 2009 due to hyperinflation. Subsequently, the country reintroduced the Zimbabwean dollar in 2019. And this was then followed by the introduction of gold coins in 2022 as part of efforts to mitigate devaluation and reduce dependence on the US dollar.
MORE RELATED POSTS
