The Central Bank of Zimbabwe launched a new “structured currency” backed by gold on Friday with a primary goal of tackling sky-high inflation and stabilizing the country’s long-floundering economy.
With short-form ZiG, the Zimbabwe Gold will replace the Zimbabwean dollar which has depreciated over the past year pushing inflation through the roof. The Governor of the Reserve Bank, John Mushayavanhu said this while presenting a monetary policy statement.
“With effect from today…banks shall convert the current Zimbabwe dollar balances into the new currency”, he said.
Mr. Mushayavanhu pointed out that the ZiG would be “fully anchored and fully backed” by a basket of reserves comprising foreign currency and precious metals, particularly gold.
The new banknotes contain a graphic of gold ingots being coined, as well as Zimbabwe’s iconic Balancing Rocks, which also appeared on the old ones. Mushayavanhu noted that citizens have been given an ultimatum of 21 days to convert their old cash into new money.
According to the governor, this crucial step aims at fostering “simplicity, certainty, and predictability” in Zimbabwe’s financial affairs as he presented the new banknotes that will come in seven denominations ranging from 1 to 200 ZiG.
Over the past year, the Zimbabwean dollar has lost nearly all of its value as against the US dollar.
According to tracker Zim Price Check, it was legally trading at about 30,000 against its more sought-after US equivalent on Friday, but it was trading at 40,000 on the underground market.
Due in part to its subpar performance, the country in southern Africa saw high inflation in March of 55%, with official figures showing that it had risen far into the triple digits the previous year.
This has increased the strain on the country’s 16 million residents, who already face extreme drought brought on by the El Nino weather trend, significant unemployment, and pervasive poverty.
