Zimbabwe’s New Gold-Backed Currency ZiG Starts Trading

Zimbabwe’s New Gold-Backed Currency ZiG Starts Trading

ZiG, Zimbabwe’s new gold-backed currency, started trading on Monday, reflecting the nation’s recent economic shift. Justin Bgoni, CEO of the Zimbabwe Stock Exchange (ZSE), announced this move. Additionally, Zimswitch, a national payment platform, confirmed the implementation of ZiG.

The decision to introduce a new currency stemmed from the significant depreciation of the former Zimbabwe dollar, prompting the Reserve Bank Governor, John Mushayavanhu, to devise a structured currency supported by a combination of foreign exchange reserves and gold, initially totalling $285 million.

Zimbabwe’s economy has seen several changes. In 2009, a multi-currency system was adopted to stabilise the economy during a period of hyperinflation. However, this system was discontinued in 2019 with the reinstatement of the Zimbabwe dollar as the sole legal tender. However, in 2020, the government switched back to the multi-currency system in recognition of the widespread use of the US dollar, which, according to ZIMSTATS, accounts for over 85% of foreign transactions.

With its stable alternative backed by gold reserves, ZiG aims to solve the problems caused by the decreasing value of the Zimbabwean dollar. This action is a reflection of the central bank’s continued efforts to maintain the value of the currency and promote economic expansion in the face of turbulent financial markets.