The Zimbabwean Reserve Bank has unveiled Zimbabwe Gold, also known as ZiG, in both paper and coin formats. This physical currency follows the digital payment method that was introduced in October, replacing the Zimbabwean dollar. The ZiG is backed by a combination of gold and foreign currencies.
The distribution of the physical currency began on April 29th, and by the end of the day, all of the country’s banks had received a supply. The launch of the ZiG was announced on April 5th, with an exchange rate of 13.56 ZiG to the US dollar.
Although digital trading in the ZiG started on April 2nd, it was first introduced in October with a value tied to the price of gold. The transition to the new currency caused disruption in the local stock market. Going forward, businesses will be required to pay at least 50% of their taxes in ZiG.
To support the introduction of the new currency, the central bank set its interest rate at 20%, a significant decrease from the previous rate of 130%. John Mushayavanhu, the central bank governor, who assumed office on March 28th, expects the inflation rate in Zimbabwe to drop from 55% to 2% annually due to the stability of the ZiG. Currently, over 80% of transactions in the country are conducted using US dollars, while the Zimbabwean dollar has lost nearly 75% of its value this 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 amount is three times the value of the ZiG currently in circulation, according to Mushayavanhu. In April, he stated during a press conference that Zimbabwe ranked third in Africa for cryptocurrency use in 2023. However, the International Monetary Fund expressed opposition to the introduction of the gold-backed currency when the plan was announced in April 2023.
In other news, Cape Town is emerging as South Africa’s digital-nomad crypto hub, according to a magazine report.