In a statement on April 6, the governor of the Reserve Bank of Zimbabwe announced the adoption of a new currency, guaranteed by the bank and backed by gold.
This is Zimbabwe Gold (ZiG), which comes to strengthen measures to reduce inflation in the country and provide macroeconomic stability.
From the local regulatory entity they added that the decision was made to address the volatility of the exchange rate, “restore the stability of prices and exchange rates and remonetize the local currency so that it fulfills its function as a medium of exchange and store of value, which seeks to rebuild market confidence, as well as the credibility of banking policies.”
The country’s economy is marked by increasing dollarization, where more than 80 % of market transactions are carried out in the US currency. However, “public outcry over excessive bank charges, the exchange problem, the rejection of dirty US dollar notes and the drawbacks of the small denominations of the Zimbabwe dollar have made it ineffective as a store of value and means of change.”
The Zimbabwe government expects demand for the local currency to increase, amid a devaluation set this week at 33,000 Zimbabwe dollars for every US dollar. On the other hand, he is betting that the ZiG, the new gold-backed currency, will soon replace the dollar in the local market.
M.Pino
Source: pensa-latina.cu
(Reference image source: Rob en Unsplash)
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