Zimbabwe’s central bank starts circulating gold-backed ZiG notes

BREAKING NEWSMay 1, 2024 at 2:18 PM UTC

TLDR

Zimbabwe introduces new currency ZiG to address currency crisis and stabilize economy amid skepticism.
ZiG, backed by gold reserves, faces resistance from some government departments, reflecting deep-seated mistrust in country's currency.
Introduction of ZiG marks latest effort in a series of attempts to replace depreciated and rejected Zimbabwe dollar.

Zimbabwe commenced the circulation of a new currency on Tuesday, aiming to replace one that has been heavily affected by depreciation and widespread rejection among the populace. The ZiG, introduced electronically in early April, is now available in banknotes and coins, marking the country's latest effort to address a longstanding currency crisis emblematic of its enduring economic challenges.

The introduction of the ZiG underscores the government's ongoing struggle to stabilize its currency amid persistent economic turmoil. Prior attempts to replace the Zimbabwe dollar have included proposals such as issuing gold coins to combat inflation and experimenting with digital currencies.

Despite its electronic launch on April 5, the ZiG, backed by the country's gold reserves, is encountering similar skepticism, with reports of some government departments refusing to accept it. This resistance underscores the deep-seated mistrust in the country's currency and highlights the formidable hurdles facing Zimbabwe's efforts to restore confidence in its monetary system.

Key Takeaways

The ZiG marks the sixth currency introduced in Zimbabwe since the dramatic collapse of the Zimbabwe dollar in 2009, a period marred by hyperinflation reaching a staggering 5 billion percent, ranking among the most severe currency crashes globally. The aftermath of this collapse triggered a tumultuous sequence of events, with various currencies being introduced and subsequently revoked, underscoring the country's prolonged struggle to achieve currency stability. Following the demise of the Zimbabwe dollar, the US dollar was initially permitted as legal tender before facing subsequent bans and reinstatements. A new form of currency, the "bond note," was introduced as legal tender, followed by the reintroduction of the Zimbabwe dollar. Efforts to address the currency crisis included proposals for gold coins and the exploration of digital currencies. However, none of these initiatives succeeded in restoring stability to the currency. Amidst these challenges, the U.S. dollar has emerged as the most trusted currency for ordinary Zimbabweans, reflecting a widespread lack of confidence in the country's domestic currency solutions.

Zimbabwe

ZiG

Monetary Policy

Economy

Currency Crisis