Zimbabwe Gold (ZiG), a newly emerged currency derived from a gold-backed token, has shown favorable performance in the foreign exchange market but has faced challenges domestically. On June 4, the Zimbabwe Reserve Bank (ZRB) unveiled new measures to combat the black market for the currency and enhance its usability.
The ZRB directly reached out to the public through its X account, urging individuals to report illegal currency traders or businesses that refuse to accept the new currency. This initiative aimed to address the issue of illegal foreign exchange trading, often conducted at unofficial rates. According to Bloomberg, since its physical introduction, ZiG has experienced a 1.9% increase in value against the United States dollar.
The introduction of ZiG has yielded mixed results. Crime Watch Zimbabwe, based in South Africa, reported on May 15 that Zimbabwean police had apprehended 224 illegal foreign exchange traders, while the RBZ Financial Intelligence Unit (FIU) froze 90 bank accounts and imposed fines on 40 individuals. The FIU also closely monitored banking activities to detect any evidence of illicit ZiG transactions. This crackdown led to a significant reduction in the number of illegal money changers operating in the Central Business District (CBD) of Harare, as well as its surrounding areas. However, the RBZ’s recent X post suggests that the struggle persists.
Additionally, the central bank is facing challenges related to the scarcity of coins. In an X post published several hours after the message regarding illegal traders, the RBZ stated its intention to expand the availability of small change, such as ZiG1, ZiG2, ZiG5, and ZiG10, across the entire economy. Moreover, starting from June 10, individuals can withdraw ZiG cash using debit cards from the government-owned Homelink financial services company in seven cities, with other financial institutions expected to offer this service in the future.
The ZiG currency has received mixed reviews from the public. This marks Zimbabwe’s sixth currency in the past 15 years and is backed by gold and foreign currency. Initially, it was introduced as a digital currency linked to the price of gold before being launched in physical form in April. However, it faced skepticism and criticism due to its similarity to central bank digital currency. Currently, the gold-backed digital token (GBDT) operates as a separate “investment instrument” from the physical ZiG. Various foreign currencies are still legally accepted in Zimbabwe.
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