Zimbabwe Gold (ZiG), the newly emerged currency originating from a gold-backed token, has shown promising performance in the foreign exchange market. However, it has encountered challenges within the country. In an effort to address these issues, the Zimbabwe Reserve Bank (ZRB) announced new measures on June 4 to combat the black market for the currency and enhance its usability.
Taking a direct approach, the ZRB reached out to the public through its X account, urging individuals to report illegal currency traders or businesses that refuse to accept the new currency. This forms part of an ongoing campaign to combat illegal foreign exchange trading, which sometimes occurs at unofficial rates. According to Bloomberg, since its physical introduction, ZiG has gained 1.9% against the United States dollar.
The introduction of ZiG has had mixed results. On May 15, Crime Watch Zimbabwe, based in South Africa, reported that Zimbabwean police had apprehended 224 illegal foreign exchange traders, and the RBZ Financial Intelligence Unit (FIU) had frozen 90 bank accounts and imposed fines on 40 individuals. The FIU was also closely monitoring banking activities to uncover evidence of illegal ZiG transactions.
The organization stated that this crackdown had led to a significant reduction in the number of illegal money changers operating in the Central Business District (CBD) of the capital, Harare, and its surrounding areas. However, the RBZ’s recent X post on June 4 indicates that the struggle against illegal traders continues.
Furthermore, the central bank is facing a shortage of coins. In an X post published several hours after the message regarding illegal traders, the RBZ expressed its intention to expand the availability of small change in denominations of ZiG1, ZiG2, ZiG5, and ZiG10 across the economy.
The RBZ also announced that ZiG cash would be accessible for withdrawal from Homelink, a government-owned financial services company, using debit cards in seven cities starting from June 10. Other financial institutions are expected to offer this service in the future.
The ZiG currency marks Zimbabwe’s sixth currency in the past 15 years. It is backed by gold and foreign currency, but it initially originated as a digital currency tied to the price of gold. It was introduced in physical form in April, eliciting a mixed response from the public.
The gold-backed token, now known as the GBDT (gold-backed digital token), faced doubts and criticism due to its resemblance to central bank digital currency. The GBDT now functions as an “investment instrument” separate from the physical ZiG. Several foreign currencies are still legally accepted in Zimbabwe.
In related news, there has been growing interest in central bank digital currency in Zimbabwe, with a government minister hinting at the possibility of its adoption amid rumors of increased Bitcoin usage in the country.
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