The Reserve Bank of Zimbabwe has unveiled a new currency called Zimbabwe Gold, or the ZiG, which is now available in both paper and coin form. This comes after the currency initially launched as a digital payment method in October. The ZiG replaces the Zimbabwean dollar and is supported by a combination of gold and foreign currencies.
According to Bloomberg, the central bank began distributing physical ZiG currency on April 29, ensuring that all banks in the country had a sufficient supply by the end of the day. The official announcement of the ZiG’s launch was made on April 5, with an initial exchange rate of 13.56 ZiG to the US dollar.
Although digital trading of the ZiG commenced on April 2, it was first introduced in October, with its value tied to the price of gold. The transition to this new currency caused significant disruption in the local stock market. Going forward, businesses will be required to pay at least 50% of their taxes in ZiG.
To accompany the introduction of the new currency, the central bank has set an interest rate of 20%, a significant decrease from the previous world-high rate of 130%. John Mushayavanhu, the governor of the central bank, who assumed office on March 28, expressed confidence that the introduction of the ZiG will help reduce Zimbabwe’s inflation rate from 55% to a more manageable 2% annually. Currently, over 80% of transactions in the country are conducted using US dollars, while the value of the Zimbabwean dollar has plummeted by nearly 75% in the current year alone.
The ZiG is backed by 2.5 tons of gold and $100 million in foreign currency reserves, giving it a total value of $285 million. This sum is three times greater than the value of the ZiG currently in circulation, according to Mushayavanhu. In an April 5 press conference, he also highlighted that Zimbabwe ranked third in Africa for cryptocurrency usage in 2023. However, the International Monetary Fund expressed opposition to the introduction of the gold-backed currency when the ZiG plan was announced in April 2023.
Furthermore, it is worth noting that Cape Town in South Africa has emerged as a digital-nomad crypto hub, attracting individuals seeking a crypto-friendly environment.