Zimbabwe’s central bank has launched a new “structured currency” backed by gold, as it seeks to tackle sky-high inflation and stabilise the country’s long-floundering economy.
The new currency – called Zim Gold (ZiG) – will be backed by foreign currencies, gold and precious minerals, John Mushayavanhu, the governor of Zimbabwe’s Reserve Bank, told reporters in the capital Harare on Friday.
Mushayavanhu said the ZiG would circulate alongside a basket of other currencies.
He said the central bank would also introduce a market-determined exchange rate.
“With effect from today … banks shall convert the current Zimbabwe dollar balances into the new currency,” he said.
The move is aimed at fostering “simplicity, certainty, [and] predictability” in Zimbabwe’s financial affairs, he added, presenting the new banknotes that come in eight denominations ranging from one to 200 ZiG.
The new notes feature a drawing of gold ingots being minted, as well as Zimbabwe’s famous Balancing Rocks, which already appeared on the old ones.
Zimbabweans have 21 days to convert their old cash into new money, Mushayavanhu said.
Its poor performance has contributed to the Southern African country’s high inflation rate, which after climbing well into the triple digits last year, was at 55 percent in March, according to official data.
The current inflation rate has piled pressure on the country’s 16 million people who are already contending with widespread poverty, high unemployment and a severe drought induced by the El Nino weather pattern.
Soaring prices have also brought back memories of 2008, when hyperinflation was so out of control that the central bank even issued a 100-trillion-dollar note, which is now a collectors’ item.
Amid these economic challenges, analysts have questioned whether Harare has enough reserves to adequately back the new currency, and if the latter could suffer from volatility in gold prices.
Its poor performance has contributed to the Southern African country’s high inflation rate, which after climbing well into the triple digits last year, was at 55 percent in March, according to official data.
The current inflation rate has piled pressure on the country’s 16 million people who are already contending with widespread poverty, high unemployment and a severe drought induced by the El Nino weather pattern.
Soaring prices have also brought back memories of 2008, when hyperinflation was so out of control that the central bank even issued a 100-trillion-dollar note, which is now a collectors’ item.
Amid these economic challenges, analysts have questioned whether Harare has enough reserves to adequately back the new currency, and if the latter could suffer from volatility in gold prices.
