Physical version of gold-backed token replaces Zimbabwe dollar

Derek Andersen3 hours agoPhysical version of gold-backed token replaces Zimbabwe dollarThe country has struggled with an unstable currency for years, but now it will have one backed by reserves three times larger than its issuance.850 Total views10 Total sharesListen to article 0:00NewsOwn this piece of crypto historyCollect this article as NFTJoin us on social networksThe Reserve Bank of Zimbabwe has introduced Zimbabwe Gold, or the ZiG, in paper and coin form, following the new currency’s debut as a digital payment method in October. It replaces the Zimbabwean dollar and is backed by a basket of gold and foreign currencies.

The central bank began distributing the physical currency on April 29, and all of the country’s lenders had a supply of it by the end of that day, according to Bloomberg. The launch of the ZiG was announced on April 5, set to an exchange rate of 13.56 ZiG to the U.S. dollar.

Digital trading in the ZiG began on April 2, although it was first introduced in October at a rate tied to the price of gold. The transition to the new currency caused havoc on the local stock market. Businesses will be required to pay at least 50% of their taxes in ZiG.

Related: Stablecoin, retail CBDC sandboxes are on South African payments roadmap

The central bank set its interest rate at 20% with the introduction of the new currency, down from a world-high of 130%. Central bank governor John Mushayavanhu, who took office on March 28, said the inflation rate in Zimbabwe should fall from 55% to 2% annually thanks to the new, more stable currency. Currently, more than 80% of transactions in the country are conducted using U.S. dollars, while the Zimbabwean dollar had lost almost 75% of its value this year alone.Source: Amalgamated Rural Teachers Union of Zimbabwe

The ZiG is backed by 2.5 tons of gold and $100 million in foreign currency reserves, for a total value of $285 million. That sum is three times the value of the ZiGs being issued, according to Mushayavanhu. He said at an April 5 press conference:“We want a solid and stable national currency in this country. It does not help to print money. Certainly under my watch it is not going to happen.”

Zimbabwe ranked third in Africa for cryptocurrency use in 2023. The International Monetary Fund opposed the introduction of the gold-backed currency after the plan for the ZiG was announced in April 2023.

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