Zimbabwe Launches Zig, World's Newest Currency

The central bank of Zimbabwe has introduced a new "structured currency" that is backed by gold to stabilize the long-collapsing economy of the nation and combat extremely high inflation. Zim Gold (ZiG), the new currency, will be backed by gold, precious minerals, and foreign currencies, Zimbabwe's Reserve Bank governor John Mushayavanhu announced to reporters in the country's capital on Friday. The ZiG would be used in conjunction with a basket of other currencies, according to Mushayavanhu. He added that an exchange rate set by the market would be implemented by the central bank. He declared, "As of right now, banks will convert current Zimbabwe dollar balances into the new currency." He continued, introducing the new banknotes, which are available in eight denominations ranging from one to 200 ZiG, saying the goal of the move is to promote “simplicity, certainty, [and] predictability” in Zimbabwe’s financial operations. Zimbabwe's iconic Balancing Rocks, which were previously depicted on the old notes, are depicted with a representation of gold ingots being struck on the new ones. According to Mushayavanhu, Zimbabweans have 21 days to exchange their old currency for new. Stability being Restored ~  Zimbabwe has always suffered from severe inflation; in recent years, rates have risen above 500%. The yearly rate of price rises reaches a seven-month high of 55.3% in March 2024. The Reserve Bank of Zimbabwe, the nation's central bank, stated that maintaining stability is crucial because the decline in the value of the country's currency has led to an increase in annual inflation. The central bank stated in a statement that "the Bank's priority policy focus is critical for supporting the economy's growth prospects through the restoration of stability, convertibility, and transactional convenience of the local currency." Newest Currency In Present Times ~  (Source: Google Images)  The Secret is Confidence ~  The Zimbabwe dollar lost value in 2008 as a result of the hyperinflation that reached astonishing levels, and the government abandoned it in 2009. Since then, the economy has made extensive use of the US dollar as well as other foreign currencies. It is yet to be seen if the public will accept the new ZiG as a reliable local currency, which would give authorities back control over monetary policy. According to the BBC, the US dollar, which is used in about 85% of transactions, is preferred by many Zimbabweans for its security. This is the reason the central bank chose to implement a multi-currency system using a combination of foreign currencies and the ZiG. Regional Payment Methods ~  According to analysts, establishing businesses and drawing in foreign investments depend on stable currencies and stable economic conditions. There are initiatives to improve local currency payment systems all over Africa. For example, the African Union and the African Export-Import Bank built the Pan-African Payment and Settlement System (PAPSS), a centralized financial market infrastructure that facilitates the safe transfer of funds across African borders. With the PAPSS, users can send money almost instantly in their home currency without having to use a bank or third-party institution or convert it into a foreign currency. Last year, an insight report from the World Economic Forum, AfCFTA: A New Era for Global Business and Investment in Africa, noted that PAPSS “will help African businesses avoid the delays in confirming payments that have long been a barrier to trade” and will “lead to increased trust and time capacity to increase trade volumes.” The Zig is a fresh effort to address Zimbabwe's monetary problems. Even though its long-term viability is uncertain, it demonstrates a determined attempt to put an end to currency instability. It will be crucial to watch in the coming months and years if the Zig is trusted, whether it can reduce inflation and whether it can strengthen the economy. Whether Zimbabwe can achieve long-term financial stability through the Zig, only time will tell.