Zimbabwean-born economist, Gareth Horsfield, says the recent introduction of a new currency, Zimbabwe Gold (ZiG) to replace the Zimbabwe dollar, is akin to putting the cart before the horse as the country does not have the conditions to sustain it.
Horsfield said that Zimbabwean authorities should first restore confidence in the financial system, put in place strong economic fundamentals, and increase production to reduce dependence on imports which drain foreign currency, among other things for a new currency to have any chance of success. He wrote:
<blockquote>
<h2>Zimbabwe’s New Structured Currency: Putting the Cart Before the Horse</h2>
Introducing a new currency in a country comes with a complex set of challenges and considerations, particularly in an economy like Zimbabwe, which has faced significant financial instability over the years.
There are several reasons why introducing a new currency in Zimbabwe may not yield the expected outcomes or could potentially exacerbate existing economic issues.
<h2>Historical Context and Economic Instability</h2>
Zimbabwe has a history of hyperinflation, most notably from 2004 to 2009, which led to the abandonment of the Zimbabwean dollar in favour of a multi-currency system that included the US dollar and the South African rand.
This history plays a crucial role in understanding the scepticism surrounding the introduction of a new currency.
Hyperinflation led to a loss of confidence in the local currency, making recovery and re-establishment incredibly difficult.
<h2>Lack of Confidence in the Financial System</h2>
Confidence in the financial system and the stability of a currency is crucial for its acceptance and functionality.
Given Zimbabwe’s history of hyperinflation, the public’s trust in any form of local currency has been severely eroded.
Introducing a new currency requires building this trust anew, a process that can take years, if not decades, of stable economic policies and practices, something Zimbabwe has struggled with.
<h2>Economic Fundamentals</h2>
For a new currency to be successful, there needs to be a strong and stable economic foundation. This includes a stable inflation rate, robust fiscal policies, and strong governance structures to manage the economy effectively.
Zimbabwe’s economy has faced challenges such as high unemployment, a decrease in industrial production, and governance issues that undermine the potential success of a new currency.
<h2>Dependency on Imports and Foreign Currency</h2>
Zimbabwe’s economy is heavily dependent on imports for basic goods and services, which necessitates a strong demand for foreign currency.
Introducing a new local currency could lead to a devaluation against stronger foreign currencies, increasing the cost of imports and potentially leading to inflation.
This reliance on imports and the need for foreign currency make it difficult for a new currency to establish itself as a stable medium of exchange.
<h2>Social and Political Challenges</h2>
The introduction of a new currency is not just an economic issue but also a social and political one. It requires the buy-in from various stakeholders, including businesses, the general public, and international partners.
In Zimbabwe, where political tensions and social unrest have been prevalent, achieving this consensus is challenging.
Political instability can further undermine confidence in any new currency, making its adoption and acceptance more difficult.
<h2>Comparative Examples</h2>
Looking at other countries that have successfully introduced new currencies, it is clear that certain conditions need to be met, such as political stability, strong economic fundamentals, and public confidence.
These conditions are not easily met in Zimbabwe’s current context, making the successful introduction of a new currency more challenging.
In conclusion, while the idea of introducing a new currency in Zimbabwe might seem like a potential solution to its economic problems, the realities on the ground present significant obstacles.
Historical economic trauma, lack of confidence in the financial system, unstable economic fundamentals, dependency on imports, and social and political challenges all contribute to the scepticism around the success of such a measure.
For a new currency to have any chance of success, Zimbabwe would need to address these underlying issues comprehensively and convincingly, a task that requires time, political will, and economic stability.
</blockquote>
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"Zimbabwe Lacks Fundamentals To Sustain New Currency"

The Consumer Protection Commission (CPC), in collaboration with the Zimbabwe Republic Police (ZRP) and the Financial Intelligence Unit (FIU), has initiated a crackdown on businesses that are rejecting the Zim dollar following the recent launch of a new currency by the Reserve Bank of Zimbabwe (RBZ).
Last Friday, RBZ Governor John Mushayavanhu introduced a novel currency called Zimbabwe Gold (ZiG). However, the rollout of the new notes and coins is scheduled for April 30.
Unfortunately, this situation has left citizens stranded. While some shops refuse to accept the Zim dollar, others that do accept it are applying exorbitant conversion rates.
In an interview with <a href="https://www.newsday.co.zw/local-news/article/200025424/govt-blitz-as-traders-dump-zimdollar">NewsDay</a>, CPC Research and Public Affairs Manager Kudakwashe Mudereri confirmed that they have received complaints from customers about unscrupulous businesses violating government policy by refusing to accept ZWL$ notes He said:
<blockquote>
It is important to note that the ZWL$ remains legal tender and the country’s citizens have been given 21 days to change their ZWL$ notes and coins to ZiG.
The penalty is going to be heavy on those found violating Exchange Control Regulations by refusing to accept ZWL$ notes.
</blockquote>
Citizens faced difficulties purchasing prepaid electricity tokens from the power utility ZESA, as well as obtaining airtime from local mobile network operators (MNOs).
On Monday, the Zimbabwe National Roads Administration (ZINARA) allegedly refused to accept the local currency at tollgates, citing that the government had banned the use of the local currency.
The situation has been exacerbated by banks, which have delayed the conversion of ZWL$ balances to ZiG.
Effie Ncube, spokesperson for the National Consumer Rights Association, characterized the introduction of ZiG as chaotic. Said Ncube:
<blockquote>
Order is critical for market confidence which will decide the value of the new currency. Having introduced different currencies on five or so occasions in the past two decades, this time around the RBZ needed to be more efficient and upfront with all the information.
That we have unanswered questions days after the introduction of the new currency should have been avoided. The process should be decisive and emphatic in all stages.
People want to know what is different now and what is there to prevent the same outcomes as was the case with previous currencies since 2000.
</blockquote>
A banker who spoke to NewsDay on Monday night said what RBZ had done was unprecedented and worked against the adoption of a local currency. Said the banker:
<blockquote>
The Zimdollar has been discarded and there is a gap in the market. You can’t go for 72 hours without a local currency and expect it to wave its magic wand.
After a week, people will say the local currency is no longer necessary. If the economy has operated for three days without the financial sector, the message is clear: The economy has informalised.
</blockquote>
Economist Gift Mugano said that the glitches that were experienced as a result of the introduction of the new currency spell doom for ZiG. He wrote on X:
<blockquote>
Traditionally, during the time of @DrJPMangudya and his predecessor Dr Gideon Gono, it was a tradition that whenever a new currency was introduced, banks were favoured with the notes and the system changeover was flawless.
Most importantly, over the years, we witnessed massive information dissemination e.g., Gedye promotion. We still remember the Gedye promotion up to the present day even if the bond note failed.
The new Governor has started his tenure on a bad note as the introduction of the new currency is characterized by:
1. System glitches which have seen the public failing to transact as both payment platforms ceased to work and the bond notes are being rejected – our lives have been put at a halt in at hospitals, pharmacies, commuters and shops – it’s a disaster and nightmare;
2. The currency was launched on 5 April but we are now told to wait up to 30 April 2024. Why do we have to wait that long? Why did the Governor rush to launch the new currency if he wasn’t ready?
3. The use of the USD has continued uninterrupted thereby reaffirming its credibility at the expense of the ZiG.
</blockquote>
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Govt Launches Blitz Targetting Traders Rejecting Zim Dollar

Harare vendors now refuse Zimbabwe dollar notes, commonly known as bond notes, due to the introduction of the new ZiG dollar.
Consequently, consumers must purchase items not on their shopping lists because traders cannot provide change for amounts less than US$1.
Despite RBZ Governor John Mushayavanu’s declaration that old notes would no longer be legal tender by the end of April, traders continue to reject them.
Moreover, Mushayavanhu said ZiG notes and coins will begin circulating in the economy on April 30, 2024, to allow the Reserve Bank to undertake an intensive educational and awareness campaign on the key security features of the ZiG notes and coins.
In an interview with <a href="https://www.newzimbabwe.com/informal-traders-reject-bond-notes-as-market-quickly-reacts-to-new-rbz-monetary-policy/">NewZimbabwe.com</a>, Jane Makura, a vendor from the Dzivarasekwa high-density suburb, expressed sentiments likely shared by many ordinary citizens. She said:
<blockquote>
I do not know whether bond notes still work. What if I let people use them at my stall and later know they are now worthless?
This is another mistake. They should just let us trade in US dollars and leave this culture of changing currencies and removing zeros.
</blockquote>
Most tuckshops in Dzivarasekwa, Warren Park and Highfields and other high-density suburbs are no longer taking the banknotes.
The new ZiG, described by NewzWire as “Mushayavanhu’s clever way of removing zeros from Zimbabwe’s currency”, has been introduced at an exchange rate of US$1 to ZiG$13.5.
Last week, economist Gift Mugano said the new currency failed before it was launched mainly because it was not backed by sufficient reserves.
Mugano outlines seven factors which he believes will undermine ZiG namely (1) a large informal sector (+80% of the economy); (2) drought of confidence; (3) drought of production; (4) printing of money &amp; excessive liquidity caused by treasury; (5) lack of national cohesion and consensus; (6) lack of policy clarity; and (7) external shocks (drought &amp; subdued commodity prices).
Meanwhile, most major retail outlets such as supermarkets are still taking the Zimdollar notes.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Informal Traders Reject Zimdollar Notes

The Reserve Bank of Zimbabwe (RBZ) says it is satisfied with the progress made in converting ZW$ balances into Zimbabwe Gold (ZiG) balances since the announcement of Monetary Policy measures on April 05, 2024.
In a statement issued on Saturday evening, RBZ Governor John Mushayavanhu said the conversion process will continue for other sectors until April 12, 2024.
Mushayavanhu also said ZiG notes and coins will begin circulating in the economy on April 30, 2024. Reads the statement:
<blockquote>
The Reserve Bank of Zimbabwe (the Reserve Bank) would like to advise that the banking sector and Payment Systems Providers (PSP) have made satisfactory progress in converting the ZW$ balances into Zimbabwe Gold (ZiG) balances since the pronouncement of the Monetary Policy measures on 5 April 2024.
The conversion process will continue for other economic sectors until Friday, 12 April 2024. Thereafter, the Reserve Bank expects that all the online payment platforms will be operating smoothly for all transactions in the economy.
As advised in the Monetary Policy Statement and Statutory Instrument 60 of 2024, the transacting public has a transitional period of up to 21 days to convert their ZW$ notes and coins to ZiG.
Accordingly, the ZW$ notes and coins will continue to be used for transactional purposes at the ZiG: ZW$ conversion factor of 2498.7242 applicable on the 8th of April 2024 within the 21-day transitional period.
The ZiG notes and coins are by these presents declared to be in production and will start circulating in the economy on 30 April 2024 to allow the Reserve Bank to undertake an intensive educational and awareness campaign on the key security features of the ZiG notes and coins.
The campaign is expected to reach out to a wide spectrum of society consistent with the Reserve Bank’s financial inclusion thrust.
<img alt="Image" decoding="async" src="https://pbs.twimg.com/media/GKgPRXYXgAE3XJE?format=jpg&amp;name=4096x4096"/><img alt="Image" decoding="async" src="https://pbs.twimg.com/media/GKgPRXWXYAAB8Ql?format=jpg&amp;name=4096x4096"/><img alt="Image" decoding="async" src="https://pbs.twimg.com/media/GKgPRWyXoAEERnj?format=jpg&amp;name=4096x4096"/><img alt="Image" decoding="async" src="https://pbs.twimg.com/media/GKgPRWwWsAA8yYe?format=jpg&amp;name=4096x4096"/>
</blockquote>
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ZiG Notes And Coins To Start Circulating On 30 April - RBZ

Zimbabwe’s newly-introduced structured currency, known as ZiG, short for Zimbabwe Gold, failed before it was even launched, an economic commentator has said.
Reserve Bank of Zimbabwe (RBZ) Governor John Mushayavanhu on Friday, April 05, announced the introduction of ZiG, which replaced the worthless Zimbabwe dollar.
However, economist Gift Mugano said the new currency failed before it was launched mainly because it was not backed by sufficient reserves.
Mugano said the genesis of Zimbabwe’s currency crisis started on 14 November 1997 when the ZW$ crashed – the Black Friday.
Since then, the ZANU PF-led Government moved from the Zimbabwe dollar (the currency adopted at independence in 1980) to USD (in 2009), Bond (in 2016), RTGS (2019 – February), ZWL$ (2019 – June), back to USD in 2020 and now to ZiG, although the latter is part of a multi-currency system. Said Mugano:
<blockquote>
At each and every point when these currencies were introduced, we witnessed massive disagreements clearly drawn on political lines and serious disregard for the experts’ views.
Like now, we are telling you that ZiG will fail dismally and you are busy defending a currency which was dead before it was announced.
So, we haven’t learnt anything in the last +26 years of the currency crisis?
</blockquote>
One Nyasha Musandu said the introduction of ZiG will not succeed as the Government lacks sincerity. She wrote on X:
<blockquote>
It worries me how many people actually think the government is being sincere with this ZiG thing. I see so much analysis and justification, and I just think to myself, we have been here before so many times. What are we failing to learn?
</blockquote>
Meanwhile, in a post on X, Mugano outlines seven factors which he believes will undermine ZiG namely (1) a large informal sector (+80% of the economy); (2) drought of confidence; (3) drought of production; (4) printing of money &amp; excessive liquidity caused by treasury; (5) lack of national cohesion and consensus; (6) lack of policy clarity; and (7) external shocks (drought &amp; subdued commodity prices). He added:
<blockquote>
The MPS presented by the new Governor today reminds me of the MPS which was presented by Dr JP Mangudya on 20 February 2019 where the later introduced the RTGS as the new currency with a starting exchange rate of ZW$2.5: US$1 (interbank rate/market).
Immediately, the exchange rate started to run away and today the ZW was trading at ZWL$40,000: US$1.
This is exactly what is going to happen to ZiG!
Over and above the 7 points raised above, the existence of the USD in the market (although unavoidable), is the worst enemy of ZiG. ZiG can’t compete with the USD in the market. 
As long as ZiG is not accepted/used exclusively at fuel stations, passport offices, ZIMRA (payment of duties &amp; taxes), schools, tuckshops, etc then forget about ZiG.
Most importantly, if individuals/anyone can’t walk into a bank and buy /sell foreign currency the same way they do in the informal market/black market at an attractive rate, then forget about ZiG.
Another serious threat to ZiG which requires special attention is excessive liquidity from the Ministry of Finance going towards payment of contractors &amp; civil servants salaries. The approved 2024 budget stood at ZWL$58.2 trillion albeit it is eroded by inflation &amp; exchange rate spiral.
The RBZ in its MPS presentation, placed emphasis on the fact that the total reserves in its coffers amount to US$285 million are more than 3 times the current reserve money, i.e., ZW$2.6 trillion (equivalent of US$90 million). This is a correct assessment.
However, the RBZ is obviously not factoring in the impact of the excessive liquidity from the Treasury. Obviously, with the exchange rate movement which has seen the official exchange rate slipping from ZWL$6K from the day when the 2024 budget was launched to ZWL$25K as of this week, it means that our budget shrunk by more than 4 times in 3 months.
The converse is true – it is implied that the budget has moved from ZW$58.2 trillion by four (4) times – so we may be talking of a realistic budget of ZWL$240 trillion.
The question which arises is that when RBZ is presenting its MPS, isn’t prudent that it must also raise a point of advice to the Treasury (as an advisor to GOZ) on the possible implications of liquidity on the exchange rate.
Likewise, isn’t it fair to request the RBZ to give us a balanced assessment of the impact of reserve money &amp; excess liquidity from the treasury on the exchange rate rather than concentrate on the reserve money supply only?
I would like to argue that the national budget has always been and will always be the biggest threat to the exchange rate stability – more than money supply.
The question which arises again is whether the US$285 million is enough to cover USD demand (demand for value preservation) from civil servants &amp; contractors. The answer is a big no!
ZiG = bond note = ZWL = RTGS = FAILURE
</blockquote>
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"ZiG Failed Before It Was Launched"

RBZ Governor John Mushayavanhu has made a firm commitment that the central bank will refrain from participating in any quasi-fiscal operations (QFOs).
In February this year, the World Bank advised the RBZ to cease all quasi-fiscal operations and unbudgeted expenditures and to transfer US$3.6 billion of its total external liabilities to the Treasury as soon as possible, since it had only transferred US$1.8 billion.
Quasi-fiscal activities include subsidies on bank loans, imports of agricultural machinery and inputs, allocation of foreign currency at subeconomic exchange rates, and minting and selling of gold coins below market prices.
Speaking at the presentation of the delayed 2024 Monetary Policy Statement in Harare on Friday, 05 April, Mushayavanhu said he has no desire to do other people’s jobs. He said:
<blockquote>
I do not believe in quasi-fiscal activities. It is not going to happen under my watch. My mandate as spelt out in the Reserve Bank Act is very clear and I have no intention to do other people’s jobs. I will do my job as the central bank governor as defined in the RBZ Act.
</blockquote>
Mushayavanhu also said the foreign exchange retention threshold will remain at 75% except for small-scale miners. He said:
<blockquote>
I am a stickler for rules and don’t come to me saying you want to retain 100%. This is not Animal Farm. We need forex to oil the economy.
</blockquote>
Economist Prosper Chitambara told <a href="https://www.newsday.co.zw/local-news/article/200025289/not-under-my-watch-declares-mushayavanhu-as-zig-is-launched">NewsDay</a> that the success of ZiG will depend on several factors including strict adherence by the central government to statutory limits in terms of the government’s borrowings from the central bank. He said:
<blockquote>
Market-dynamic forces of demand and supply must have greater sway in terms of foreign exchange rate determination. That also helps to boost confidence in the whole foreign exchange management system.
</blockquote>
Mushayavanhu also reduced the bank policy rate to 20% per annum from 130% per annum to reduce the cost of borrowing money and accessing credit.
The RBZ removed bank charges for individual bank accounts with a daily balance of US$100 and below or its equivalent in ZiG for a period of up to 30 days.
Also speaking to NewsDay, industrialist Anthony Mandiwanza said the jury is still out on the success of ZiG. He said:
<blockquote>
The rate is now down to ZiG13,5616. If it is going to be sustainable, reflected in the consumer price, then it’s working, and it will largely stimulate productivity. But, if it doesn’t, there will be challenges.
The point is the banks must be able to give you foreign currency if you go and apply if your account is funded, and the banks have no reason to retain that foreign currency if they can still get that foreign currency in the market.
So, it depends on whether the banks will be able to get foreign currency in the open market, but the jury is still out.
</blockquote>
RBZ Monetary Policy Committee member Persistence Gwanyanya said the introduction of a structured currency will bring stability.
He urged members of the public to support the new measures.
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Quasi-fiscal Activities Will Not Happen Under My Watch, Declares Mushayavanhu

The Government has revealed the design, colour, size and material of the Zimbabwe Gold (ZiG) notes and coins.  President Emmerson Mnangagwa invoked his powers under the Presidential Powers (Temporary Measures) Act to gazette the Presidential Powers (Temporary Measures) (Zimbabwe Gold Notes and Coins) Regulations, 2024 which outlines the characteristics of the new ZiG notes and coins.
According to the regulations, all denominations of ZiG notes are equal in size and are also made from cotton paper. See the table below:
<table class="table table-bordered table-hover" id="table_1" style="width: 96.3647%; height: 260px;">
<tbody>
<tr>
<td style="width: 23.3732%;" title="Character Accurarcy=98.92">ZiG</td>
<td style="width: 17.1315%;" title="Character Accurarcy=99.32">Composition</td>
<td style="width: 19.9203%;" title="Character Accurarcy=99.58">Watermark</td>
<td style="width: 21.2483%;" title="Character Accurarcy=99.78">Size</td>
<td style="width: 22.0452%;" title="Character Accurarcy=99.94">Basic Colour</td>
</tr>
<tr>
<td style="width: 23.3732%;" title="Character Accurarcy=99.59">One ZiG</td>
<td style="width: 17.1315%;" title="Character Accurarcy=99.97">Cotton Paper</td>
<td style="width: 19.9203%;" title="Character Accurarcy=99.75">Zimbabwe Bird</td>
<td style="width: 21.2483%;" title="Character Accurarcy=96.55">155mm X 65mm</td>
<td style="width: 22.0452%;" title="Character Accurarcy=99.92">Blue</td>
</tr>
<tr>
<td style="width: 23.3732%;" title="Character Accurarcy=99.5">Two ZiG</td>
<td style="width: 17.1315%;" title="Character Accurarcy=99.97">Cotton Paper</td>
<td style="width: 19.9203%;" title="Character Accurarcy=99.76">Zimbabwe Bird</td>
<td style="width: 21.2483%;" title="Character Accurarcy=97.56">155mm X 65mm</td>
<td style="width: 22.0452%;" title="Character Accurarcy=99.98">Green</td>
</tr>
<tr>
<td style="width: 23.3732%;" title="Character Accurarcy=99.63">Five ZiG</td>
<td style="width: 17.1315%;" title="Character Accurarcy=99.96">Cotton Paper</td>
<td style="width: 19.9203%;" title="Character Accurarcy=99.72">Zimbabwe Bird</td>
<td style="width: 21.2483%;" title="Character Accurarcy=96.9">155mm X 65mm</td>
<td style="width: 22.0452%;" title="Character Accurarcy=99.95">Red</td>
</tr>
<tr>
<td style="width: 23.3732%;" title="Character Accurarcy=99.5">Ten ZiG</td>
<td style="width: 17.1315%;" title="Character Accurarcy=99.97">Cotton Paper</td>
<td style="width: 19.9203%;" title="Character Accurarcy=99.8">Zimbabwe Bird</td>
<td style="width: 21.2483%;" title="Character Accurarcy=96.48">155mm X 65mm</td>
<td style="width: 22.0452%;" title="Character Accurarcy=99.93">Dark Blue</td>
</tr>
<tr>
<td style="width: 23.3732%;" title="Character Accurarcy=99.6">Twenty ZiG</td>
<td style="width: 17.1315%;" title="Character Accurarcy=99.97">Cotton Paper</td>
<td style="width: 19.9203%;" title="Character Accurarcy=98.36">Zimbabwe Bird</td>
<td style="width: 21.2483%;" title="Character Accurarcy=96.33">155mm X 65mm</td>
<td style="width: 22.0452%;" title="Character Accurarcy=99.99">Peach</td>
</tr>
<tr>
<td style="width: 23.3732%;" title="Character Accurarcy=99.62">Fifty ZiG</td>
<td style="width: 17.1315%;" title="Character Accurarcy=99.97">Cotton Paper</td>
<td style="width: 19.9203%;" title="Character Accurarcy=99.75">Zimbabwe Bird</td>
<td style="width: 21.2483%;" title="Character Accurarcy=95.66">155mm X 65mm</td>
<td style="width: 22.0452%;" title="Character Accurarcy=99.94">Orange</td>
</tr>
<tr>
<td style="width: 23.3732%;" title="Character Accurarcy=99.75">One Hundred ZiG</td>
<td style="width: 17.1315%;" title="Character Accurarcy=99.97">Cotton Paper</td>
<td style="width: 19.9203%;" title="Character Accurarcy=98.05">Zimbabwe Bird</td>
<td style="width: 21.2483%;" title="Character Accurarcy=96.88">155mm X 65mm</td>
<td style="width: 22.0452%;" title="Character Accurarcy=99.97">Olive Green</td>
</tr>
<tr>
<td style="width: 23.3732%;" title="Character Accurarcy=99.76">Two Hundred ZiG</td>
<td style="width: 17.1315%;" title="Character Accurarcy=99.97">Cotton Paper</td>
<td style="width: 19.9203%;" title="Character Accurarcy=99.8">Zimbabwe Bird</td>
<td style="width: 21.2483%;" title="Character Accurarcy=95.97">155mm X 65mm</td>
<td style="width: 22.0452%;" title="Character Accurarcy=99.94">Purple</td>
</tr>
</tbody>
</table>
The exchange rate for the new currency has been calculated by dividing the official rate by today’s gold price. Based on current rates, this translates to approximately 13.6 ZiG per USD.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

"All ZiG Notes Are Equal In Size And Made From Cotton Paper"

The Government of Zimbabwe has replaced the Zimbabwe dollar with a new unit called the ZiG backed by a basket of foreign currency and gold.
Reserve Bank of Zimbabwe (RBZ) Governor John Mushayavanhu told a press conference in Harare on Friday, 05 April, that the ZiG, short for Zimbabwe Gold, would be launched on April 8 at an introductory level of 13.56 per dollar and a new interest rate set at 20%.
In his maiden monetary policy statement Mushayavanhu said all Zimdollar prices in the shops must now be converted to the new ZiG.
Mobile operators, such as money transfer services, have until Monday to shift their platforms to the new ZiG. All Zimdollar balances will now be converted to this new currency. Said Mushayavanhu:
<blockquote>
With effect from 5 April 2024, banks shall convert the current Zimbabwe dollar balances into the new currency which shall be called Zimbabwe Gold (ZiG) to foster simplicity, certainty, and predictability in monetary and financial affairs.
The new currency will co-circulate with other foreign currencies in the economy. The swap rate will be guided by the closing interbank exchange rate and the price of gold as at 5 April 2024.
The swap rate shall be used to make legitimate conversions of all ZW$ deposits in the banking sector; all ZW$ loans and advances made by the sector; ZW$ treasury bills; all outstanding auction allotments; all export surrender obligations; all prices of goods and services in ZW$; and any other ZW$ denominated obligations.
On conversion of all current ZW$ balances, banks are directed to rename all the current ZW$ accounts as ZiG accounts.
Gold-backed Digital Token (GBDT) accounts will no longer be called ZiG accounts but will be known as GBDT accounts.
All ZW$ notes and coins held by account holders will be credited into their ZiG accounts using the applicable conversion factor.
The banks will continue to accept these deposits for a period of 21 days after 5 April 2024. The Reserve Bank has made special arrangements for those without bank accounts to swap their ZW$ notes and coins at POSB and AFC Commercial Bank within 21 days after 5 April 2024.
In instances where the cash holding to be exchanged is above ZW$100,000, banks shall apply the requisite know your customer (KYC) and Customer Due Diligence (CDD) principles.
</blockquote>
Mushayavanhu also said the central bank will only print money that is fully backed by forex reserves or assets, and that he will make sure that the currency is fully convertible into the reserve currency on demand. He said:
<blockquote>
The introduction of the new structured currency will naturally require the issuance of new banknotes to facilitate transactions in the economy, whilst maintaining the Bank’s policy of a cash-lite economy.
These notes shall be issued gradually in the market to cater for small transactions and to ensure the availability of change, thus, mitigating the use of retail vouchers in the local economy. As such, the proposed denominations will bring convenience to the transacting public.
Accordingly, ZiG notes and coins shall be issued in denominations made up of 1ZiG, 2ZiG, 5ZiG, 10ZiG, 20Zig, 50ZiG, 100ZiG, and 200ZiG which will be distributed through the usual normal banking channels and, will be fully covered by the quantity and value of gold and foreign currency held as reserves. The currency denominations are also informed by the intervening exchange rate of the ZiG to the US$.
</blockquote>
The USD remains legal tender, and the multicurrency system will stay until at least 2030.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

All Zimdollar Balances To Be Converted To ZiG - RBZ

The Reserve Bank of Zimbabwe (RBZ) has summoned chief executives from major financial institutions, specifically banks, to convene for a meeting on Friday morning. This meeting precedes the eagerly awaited launch of a new currency.
As reported by The NewsHawks, bank chief executives will engage in discussions with both the outgoing RBZ governor, John Mangudya, and his incoming successor, John Mushayavanhu.
Their focus will be on the intricacies and procedures involved in introducing the structured currency, which will be outlined in a delayed monetary policy statement (MPS).
Mushayavanhu, whose official appointment was moved up to 28 March (instead of 1 May), will assume a prominent role tomorrow. He will be supported by the outgoing governor during this crucial phase to ensure a seamless transition.
Although Mangudya’s term officially concludes on 30 April, he is expected to take leave soon and gradually step away from his current position. However, he will re-emerge later as the chief executive of the Mutapa Investment Fund (Sovereign Wealth Fund). The NewsHawks quoted a monetary authority as saying:
<blockquote>
We have summoned bank chief executives or heads of key financial institutions to a meeting tomorrow morning to discuss the launch of the new currency before its subsequent announcement.
We want to brief them about the process and modalities, which they were involved in during consultations anyway before the monetary policy is delivered.
The plan is for it to be presented by Mushayavanhu, supported by Mangudya who will explain issues afterwards.
</blockquote>
The Zimbabwean dollar is now on a freefall – hitting US$1: ZWL40 000 on the parallel market – while annual inflation is 55.3%. Officially, the exchange rate is US$1: ZWL$22 447.5.
On Thursday, President Emmerson Mnangagwa visited the Reserve Bank of Zimbabwe where he was shown the country’s gold reserves ahead of the presentation of the 2024 Monetary Policy. He later posted on X:
<blockquote>
Today, I toured and inspected the Reserve Bank’s gold reserves, a pivotal step in backing our new structured currency. This move reinforces our commitment to economic stability and lays the foundation for a prosperous future.
</blockquote>
President Mnangagwa’s spokesperson, George Charamba, also took to X and elaborated on his principal’s visit to the central bank. He wrote:
<blockquote>
Zimbabwe’s currency will be anchored on our gold reserves. To that end, His Excellency the President, Dr ED Mnangagwa, today visited RBZ vaults to satisfy himself that the gold reserves were indeed there, and enough to support the launch of a new currency.
A combination of gold – both in RBZ vaults and offshore – plus foreign currency reserves held by both RBZ and the Government, places Zimbabwe in good stead for the launch of the new currency.
Zimbabwe now has a policy of keeping a percentage of its gold as reserves, alongside other precious minerals. Those too bulky to be kept in physical form are offset by the gold equivalent.
This new policy rectifies an anomaly where a gold-producing country did not have reserves in physical form.
After the tour, the President fielded questions from journalists, many of whom sought assurances that the new currency would hold its own, and would be convertible.
The gold basis of the currency means its value moves in sympathy with the international prices of gold, thus escaping the instability wrought by speculative whims.
Gold coins, themselves a precursor to this new move on currency, have largely held, proving that a currency anchored on real wealth is bound to be durable.
</blockquote>
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Reserve Bank Of Zimbabwe Summons Bank CEOs | Report

In an apparent response to Government spokesperson Nick Mangwana, who accused unnamed individuals of undermining Zimbabwe’s currency and sabotaging efforts to stabilize the economy, economist Professor Gift Mugano suggested that it is the government’s actions that undermine the Zim dollar.
Posting on X, Mangwana, who serves as the permanent secretary of the Ministry of Information, Publicity, and Broadcasting Services, stated that some citizens are on a “crusade” to undermine all government efforts aimed at stabilizing the economy. <a href="https://x.com/nickmangwana/status/1775499882066833542?s=20">He said</a>:
<blockquote>
Why would anyone doggedly make it their mission to fight Zimbabwe’s currency? Why would they turn themselves into a crusader in an effort to sabotage all the endeavours to stabilize things in Zimbabwe? Rank Treachery.
</blockquote>
In a separate post, Mugano asserted that excessive printing of money and the unresolved confidence crisis emanating from actions of monetary authorities are among the enemies of the Zimbabwe dollar and the yet-to-be-introduced structured currency. <a href="https://x.com/gift_mugano/status/1775597088241328624?s=20">He said</a>:
<blockquote>
The enemies of our currency &amp; the so-called structured currency are:
1. Excessive printing of money &amp; excess liquidity caused by command agriculture; wrong financing model on roads &amp; key infrastructures;
2. A dominant informal sector which is governed by informal rules &amp; has no regard for govt policies – the informal sector has its own governor, mattress bank, minister of finance, etc
3. devastating drought &amp; subdued commodity prices which have a combined effect of reducing the availability of USD liquidity
4. unresolved confidence crisis caused by loss of capital/pensions/savings/insurance/investments as a result of incessant currency collapse &amp; currency crisis
5. lack of policy clarity – our economic problem is centred around structural rigidities which require structural policies (industrial, trade and agricultural policies). We haven’t seen much activities &amp; media coverage on these policies in the same way we have seen visibility &amp; pronouncements on monetary &amp; fiscal policies. In short, our structural policies are not up to scratch.
6. drought of production – the best way to defend our currency is to institute policy measures and conditions that promote a productive economy (e.g., sound structural policies, working markets, market-led economy, sound financial sector, stable political environment powered by rule of law, constitutionalism and strong institutions).
7. Broken politics – we have invested so much energy in disunity &amp; hate speech instead of fostering peace, unity, tolerance and love. We are allergic to national dialogue, social contracts, divergent views, etc. Ironically, we expect to see flawless implementation of public policies and attainment of the desired economic goals when we are divided.
Structured currency = bond note, gold coins/gold token/ZiG. Bond note &amp; ZiG were/are local currencies backed by USD &amp; gold, respectively but failed dismally because of the reasons I mentioned above.
This is why I am convinced that a local currency or structured currency will always fail as long as the factors raised above are not adequately addressed.
</blockquote>
Businessman Kuda Musasiwa characterised the structured currency as a “mubobobo” currency, referring to a traditional medicine acquired by men that allegedly enables them to rape women without any physical contact. He wrote:
<blockquote>
I have never physically touched a $50 note in Zimbabwe. I’ve seen it on Twitter. I ain’t never seen a real gold coin from RBZ. I saw it on Twitter.
Not even when I jumped on a combi from Hatcliffe to Helensvale did I see anyone pay in a local note? I’m in tech and I have NEVER experienced a ZiG.
I tell you NOT one lie, PaDust in Hatcliffe, when we pick up our daily cash from the ladies who horder from the Fresh Farm every morning, not ONE has offered to pay in ZWLs in the whole of 2024 and we are now 4 months in.
I can admit that sometimes in the Trade centre some guys will offer to “swipe” for me when shopping … Offering a better “rate”. But my maths is bad and can’t be fucked most of the time to even bother.
Don’t even know how they work. 🤣These are fictional currencies. Like the one coming. How are our leaders so out of touch?
Mubobobo currencies.
</blockquote>
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Enemies Of Zimbabwe Dollar, Structured Currency - Prof Mugano

On Thursday, President Emmerson Mnangagwa decided to retire Reserve Bank of Zimbabwe (RBZ) governor John Mangudya a month ahead of schedule. This move was aimed at providing space for his successor, John Mushayavanhu, to issue a long-awaited Monetary Policy Statement (MPS), as reported by <a href="https://www.newsday.co.zw/local-news/article/200024983/why-mnangagwa-cut-short-mangudyas-reserve-bank-stay">NewsDay</a>.
Mushayavanhu is anticipated to devise new strategies to stabilize the economy, which is grappling with surging inflation and significant depreciation of the local currency.
According to NewsDay, a source revealed that Mnangagwa found himself compelled to take action after prematurely disclosing the government’s intentions to introduce a structured currency. Said the source:
<blockquote>
It would not have made sense to allow Mangudya to release a Monetary Policy Statement (MPS) when he will be leaving office in a month.
In addition, monetary authorities were under pressure to release the MPS after President Mnangagwa jumped the gun by announcing plans for a structured currency. The announcement caught everyone by surprise.
</blockquote>
Next week, Mushayavanhu is set to unveil the highly anticipated Monetary Policy Statement (MPS), wherein he will delve into the structured currency—a potential long-term remedy for the woes faced by the Zimbabwe dollar.
On Thursday, Deputy Minister of Finance, Economic Development, and Investment Promotion, Kudakwashe Mnangagwa, alluded to forthcoming measures aimed at shoring up the local currency.
Posting on the Ministry’s X page, Mnangagwa advised Zimbabweans against disposing of the Zimdollar. He wrote:
<blockquote>
We have been receiving enquiries about the surge in the exchange rate, which right now can be attributed to the anxiety and anticipation of the upcoming Monetary Policy Statement which is around the corner.
If I were to irresponsibly give unsolicited advice, I would urge Zimbabweans with their hard-earned ZWL not to hedge against it.
Government is committed to ensuring that there will be no loss of value through the introduction of currency stabilisation measures.
</blockquote>
In a notice published in the Government Gazette yesterday, Finance, Economic Development and Investment Promotion Minister Mthuli Ncube said:
<blockquote>
It is hereby notified that His Excellency the President has, in terms of section 14 of the Reserve Bank of Zimbabwe Act [Chapter 22:15] appointed John Mushayavanhu as the governor of the Reserve Bank of Zimbabwe for a period of five years beginning on March 28, 2024 and ending on March 27, 2029.
</blockquote>
In December 2023, Mnangagwa appointed Mushayavanhu as Mangudya’s successor. His official start date was May 1, immediately following the end of Mangudya’s term.
Mangudya’s term was scheduled to conclude on April 30, at which point he would transition to his new role as the Chief Executive Officer of the Mutapa Investment Fund on May 1.
Mushayavanhu faces the formidable challenge of halting the Zimdollar’s rapid depreciation. Over the past three months, it has plummeted by more than 250%, and last year alone, the local currency depreciated by a staggering 700%.
Despite previous efforts, the government’s measures to stabilize the local currency have proven ineffective.
Back in 2022, when the government introduced gold coins to absorb excess local currency, the Zim dollar was trading at a rate of US$1 to ZWL$2,000 on the parallel market.
By yesterday, March 28, 2024, the parallel market rate had surged to ZWL$30,000 per US$1.
The depreciation of the currency has driven up prices, resulting in annual inflation skyrocketing to 55.3% in March from 47.62% in February.
Interestingly, inflation has continued to rise even though more than 80% of transactions now occur in United States dollars.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

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