Harare(WNAM Monitoring): The Zimbabwe government on Friday announced a new structured currency the ZiG which will be backed by a basket of foreign currencies, gold and other precious metals.
A structured currency is defined as a currency that is pegged to a specific exchange rate or currency basket and backed by a bundle of foreign exchange assets (potentially including gold).
This means that a Central Bank can only issue domestic notes and coins when fully backed by a foreign “reserve” currency or foreign exchange assets and that the currency is fully convertible into the reserve currency on demand.
Presenting the 2024 Monetary Policy Statement, newly appointed Reserve Bank of Zimbabwe governor John Mushayavanhu said the new structured currency being introduced is anchored by a composite basket of foreign currency and precious metals (mainly gold) held as reserves for this purpose by the central bank.
Mushayavanhu said the ZiG would be launched on April 8 at an introductory rate of 13.56 per dollar and a new interest rate set at 20 percent.
“With effect from 5 April 2024, banks shall convert the current Zimbabwe dollar balances into the new currency which shall be called Zimbabwe Gold (ZiG) to foster simplicity, certainty, and predictability in monetary and financial affairs. The new currency will co-circulate with other foreign currencies in the economy.
“The swap rate will be guided by the closing interbank exchange rate and the price of gold as at 5 April 2024.
The swap rate shall be used to make legitimate conversions of all ZW$ deposits in the banking sector; all ZW$ loans and advances made by the sector; ZW$ Treasury Bills; all outstanding auction allotments; all export surrender obligations; all prices of goods and services in ZW$; other ZW$ denominated obligations,” he said.
Mushayavanhu said banks will convert their current Zimbabwean dollar balances into the ZiG and on conversion, banks will rename all the current ZWL accounts as ZiG accounts.
Gold-backed Digital Token (GBDT) accounts will no longer be called ZiG accounts but will be known as GBDT accounts.
All ZWL notes and coins held by account holders will be credited into their ZiG accounts using the applicable conversion factor with banks continuing to accept these deposits for a period of 21 days after 5 April this year.
Mushayavanhu said the Reserve Bank has made special arrangements for those without bank accounts to swap their ZWL notes and coins at the POSB and AFC Commercial Bank within 21 days after 5 April 2024.
The ZiG notes and coins shall be issued in denominations made up of 1ZiG, 2ZiG, 5ZiG, 10ZiG, 20Zig, 50ZiG, 100ZiG, and 200ZiG.
“We want a solid and stable national currency in this country,” said Mushayavanhu. “It does not help to print money. Certainly under my watch it is not going to happen.”
