The Reserve Bank of Zimbabwe (RBZ) is introducing the physical equivalent of ZiG tokens, a digital currency backed by the country’s gold reserves.
The Reserve Bank of Zimbabwe is issuing ZiG banknotes into circulation, beginning to provide physical reserves of the currency to all banks in the country. The largest denomination of the new currency is 200 ZiG ($15), while the smallest banknote is 1 ZiG ($0.01). This is reported by Bloomberg.
Zimbabwe Gold (ZiG) is a token backed by physical gold stored at the Reserve Bank of Zimbabwe (RBZ). The digital currency was recognized as the country’s official means of payment in October 2023.
According to Lawrence Nyazema, President of the Bankers Association of Zimbabwe, all 19 banks in the country were secured with the bills by Monday evening, April 29. He said the next couple of weeks will be crucial for ZiG as the volume of currency in circulation should reach a sufficient value during this period. Nyazema also urged Zimbabweans to continue using both the digital and physical versions of the currency to make payments.
Plans to launch ZiG were revealed by John Mangudya, Governor of the RBZ, in early April 2023. The main purpose of the initiative was the need for a reliable and stable national currency, as well as the need to protect the fiat savings of local residents from volatility. Already in mid-April 2023, the first round of token sales was initiated, in which the government raised ~$39 million.
The transition to the new currency triggered chaos in the local stock exchange. Stock trading volume and transaction value plummeted as the exchange converted stock prices to the new unit of measure. The drop in trading volumes caused revenues of some local brokerage firms to fall by at least 50%. Meanwhile, the introduction of the new currency helped interest rates fall from 130% to 20%.
