Zimbabwe’s national bank has launched Zimbabwe Gold (ZiG), a tangible form of currency backed by gold and external currencies, replacing the unstable Zimbabwean dollar. The digital version of ZiG was launched as a payment method in October, with physical paper and coin forms released on April 29. On the day of its release, all of Zimbabwe’s banks had sufficient supplies of the new currency, which was set at an exchange rate of 13.56 ZiG to the U.S. dollar.
ZiG’s digital trading began on April 2, initially introduced at a price tied to gold. This shift to the new monetary platform had initially disrupted the local stock market but is expected to stabilize incidents of external trade. Businesses are obliged to pay at least half of their tax duties in ZiG.
The rampant inflation in Zimbabwe, which had reached 130% interest rates, was slashed to 20% with the introduction of ZiG. According to central bank governor, John Mushayavanhu, the new currency is anticipated to bring down the inflation rate from 55% to a modest 2% annually. The Zimbabwean dollar, moreover, had lost about 75% of its value just this year, while over 80% of Zimbabwe’s transactions utilized U.S. dollars.
The value of the ZiG is ensured by an asset base composed of 2.5 tons of gold and $100 million in foreign currency reserves, equivalent to $285 million. This amount is triple the value of the actual ZiG issuance. Despite ranking third in Africa for cryptocurrency use in 2023 and experiencing friction initially from the International Monetary Fund, Zimbabwe is determined to establish a resilient and stable national currency.