John AdoyiThe Reserve Bank of Zimbabwe (RBZ) has announced the introduction of a new currency, Zimbabwe Gold (ZiG), which will replace the Zimbabwean Dollar.
The ZiG notes and coins are set to go into circulation on April 30, 2024. The decision comes after years of hyperinflation that significantly devalued the Zimbabwean Dollar, prompting the government to seek a more stable currency.
The new currency is backed by bullion and foreign currency reserves held at the central bank, providing a more secure foundation for its value. RBZ Governor John Mushayavanhu stated that the old currency, including bond notes, will continue to be used for transactions during a grace period of 21 days while the ZiG is being produced.
“The ZiG notes and coins are by these presents declared to be in production and will start circulating in the economy on 30 April 2024,” Mushayavanhu stated.
The official conversion rate between the Zimbabwean Dollar and ZiG has been set at 2498.7242 ZW$ to 1 ZiG, applicable on April 8, 2024.
The RBZ has been working closely with the banking sector and Payment Systems Providers to ensure a smooth transition to the new currency in their systems, the governor stated.
Last year, Zimbabwe issued gold-backed digital tokens under the ZiG brand, which were later allowed for use as an official means of payment for local transactions. Now, the ZiG brand is being adopted as the new local currency, replacing the Zimbabwean Dollar.
The decision to phase out the Zimbabwean Dollar follows years of economic challenges, including hyperinflation that peaked in 2008 with inflation rates exceeding 231 million per cent. The currency was abandoned for the US Dollar in 2009 but was reintroduced in 2019. However, continued depreciation and economic instability have led to the introduction of ZiG.
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Zimbabwe’s annual inflation rate increased to about 55.3% in March 2024, up from 47.6% in February, as the Zimbabwean Dollar continued to depreciate. The new ZiG currency will be fully backed by $100 million in cash and 2,522 kilograms of gold worth $185 million, providing a stable foundation for its value.
To ensure a successful rollout, the RBZ plans to launch an intensive educational and awareness campaign on the security features of the ZiG notes and coins. This campaign aims to reach a wide spectrum of society, aligning with the central bank’s financial inclusion goals.
