Zimbabwe has introduced its new digital currency, Zimbabwe Gold (ZiG), which is backed by gold and intended for use in domestic transactions to counter re-dollarization efforts.
These digital tokens are a digital representation of the physical Mosi-ca-Tunya gold coins that the Reserve Bank of Zimbabwe (RBZ) released in 2022, which successfully helped combat the country’s inflation.
Zimbabwe Gold (ZiG), denominated in milligrams, aims to strengthen the national currency while also providing an alternative investment avenue, moving away from the widespread practice of relying on the U.S. dollar in the unofficial market.
According to the Reserve Bank of Zimbabwe:
“Starting from October 5, 2023, ZiG will be accepted as a means of payment for domestic transactions, in addition to its value preservation function. The value of ZiG will be on par with the physical Mosi-ca-Tunya gold coin and will be determined by the international gold price. Banks will maintain dedicated ZiG accounts and facilitate transactions in ZiG, similar to local and foreign currencies.”
These gold-backed digital tokens were initially launched in May 2023 for investment purposes, and the central bank has now expanded their use to businesses and ordinary citizens. ZiG, held in electronic gold wallets or on e-gold cards, will be tradable and capable of facilitating person-to-person (P2P) and person-to-business (P2B) transactions and settlements.
Starting from October 5, 2023, the general public can purchase the gold-backed digital currency from banks using either the local currency or U.S. dollars. Prices for goods and services will be denominated in ZiGs.
Individuals who possess physical gold coins have the option to exchange or convert them into gold-backed digital tokens through the banking system.
Bank customers can conduct transactions through their ZiG accounts using point-of-sale machines or online payment methods.
The RBZ Governor, John Mangudya, highlighted the significance of the Gold Coins as a key monetary policy tool, absorbing over $35 billion in Zimbabwean dollars from a cumulative count of 36,059 coins as of July 14, 2023.
The Zimbabwean government, led by President Emmerson Mnangagwa, is concerned about the resurgence of the U.S. dollar in the country’s economy and its potential negative impact on already fragile economic stability.
ZiG is expected to serve as the foundation for Zimbabwe’s central bank digital currency (CBDC) because of its current structure and features, which share similarities with a CBDC.
