The Reserve Bank of Zimbabwe has recently launched the Zimbabwe Gold, also known as the ZiG, in both paper and coin forms. This new currency replaces the Zimbabwean dollar and is backed by a combination of gold and foreign currencies.
According to Bloomberg, the physical distribution of the ZiG began on April 29, and all the banks in the country had received their supply by the end of the day. The announcement of the ZiG launch was made on April 5, with an initial exchange rate of 13.56 ZiG to the United States dollar.
While digital trading of the ZiG started on April 2, it was first introduced in October, with its value tied to the price of gold. The transition to this new currency has caused some disruptions in the local stock market. As part of the new currency regulations, businesses will be required to pay at least 50% of their taxes in ZiG.
The central bank has set the interest rate for the ZiG at 20%, which is a significant decrease from the previous rate of 130%. The governor of the central bank, John Mushayavanhu, who assumed office on March 28, has expressed optimism that the introduction of the ZiG will reduce the inflation rate in Zimbabwe from 55% to 2% annually. Currently, more than 80% of transactions in the country are conducted using US dollars, while the value of the Zimbabwean dollar has declined by nearly 75% 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, as stated by Mushayavanhu. He also revealed during a press conference on April 5 that Zimbabwe ranked third in Africa for cryptocurrency usage in 2023. However, the International Monetary Fund expressed opposition to the introduction of the gold-backed currency when the plan for the ZiG was announced in April 2023.
In other news, Cape Town has emerged as a digital-nomad cryptocurrency hub in South Africa, according to a magazine article.