Zimbabwe has launched the world’s newest currency – the ZiG. The new gold-backed currency called the ZiG, or Zimbabwe Gold, has come into effect from April 5, 2024 and will co-circulate with other foreign currencies in the economy. Banks in Zimbabwe have been converting the country’s previous national currency, the Zimbabwe dollar, into ZiGs.
The swap rate was decided by Zimbabwe’s central bank based on the closing interbank exchange rate and the price of gold as of April 5, 2024. The swap rate was used to make legitimate conversions of all ZW$ deposits in the banking sector, all ZW$ loans and advances made by the sector, all prices of goods and services in ZW$ and any other ZW$ denominated obligations.
All ZW$ notes and coins held by account holders will be credited into their ZiG accounts using the applicable conversion factor. The banks were asked to continue to accept these deposits for a period of 21 days after 5 April 2024.
Gold loans should take off by Nov: Shriram Finance CEO
Trump vs Harris: Navigating the future of US-India relations through tech, talent and trust
J&K voters have signalled a huge win for democracy, but this is just the beginning of a long journey to normalcy
West Asia conflict: Further export slump could weaken growth, no major fiscal worries yet
ZiG notes and coins are now issued in denominations made up of 1ZiG, 2ZiG, 5ZiG, 10ZiG, 20Zig, 50ZiG, 100ZiG, and 200ZiG which will be distributed through the usual normal banking channels and, will be fully covered by the quantity and value of gold and foreign currency held as reserves.
The introduction of ZiG is an attempt to mitigate the currency instability and hyperinflation that has plagued the country for decades.
Zimbabwe has historically suffered from excessive inflation, with rates topping 500% in recent years. In March 2024, the yearly rate of price rises was 55.3%, a seven-month high.
Many Zimbabweans value the security of the US dollar, which accounts for over 85% of transactions, according to the BBC. For this reason, the central bank decided to use a combination of the ZiG and foreign currencies in a multi-currency system.
It remains to be seen if the new ZiG will earn public trust and become a stable local currency, allowing policymakers to restore control of monetary policy.
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 of the local currency being issued.
