Wed. 20 Sept. Zim Notes, Bonds. Facts about Zimbabwe:
Zimbabwe wanted to join a bank founded by the BRICS group of emerging nations — but the US de-dollarization debate had already started before the country’s application was approved. https://www.herald.co.zw/zim-seeks-to-join-brics-growing-influence/
For years Zimbabwe has been in an economic crisis, with inflation running at 101.3% in July compared with the same month last year: https://www.theguardian.com/world/2023/aug/22/zimbabwe-goes-to-the-polls-amid-deepening-economic-crisis
Zimbabwe’s official currency is the Zimbabwe dollar, but John Mangudya, the governor of the country’s central bank, told Bloomberg in July the US dollar was used in 75% of all transactions in Zimbabwe. https://markets.businessinsider.com/news/currencies/de-dollarization-dollar-dominance-pegged-currencies-argentina-countries-greenback-inflation-2023-6
https://www.bloomberg.com/news/articles/2023-07-24/us-dollar-still-rules-in-zimbabwe-despite-local-currency-rally
Zimbabwe’s government banned the use of foreign currencies as legal tender in 2019. Mnangagwa said at the time that the country’s economy was “at the mercy of US dollar pricing, which has been a root cause of inflation.” The country was forced, however, to reverse the ban in June 2022 to rein in inflation. https://www.reuters.com/article/zimbabwe-economy-idUSL8N23V2BJ
In August a liquor-store owner in Zimbabwe, told the Associated Press, “How can one budget with the Zimbabwe dollar that is always changing in value? It is not stable, and we have been burned before.” https://apnews.com/article/dollar-dominance-brics-summit-global-economy-d4322e1f99480962eccc05628a0ddb64
Zimbabwe’s gold-backed digital currency comes a year after the country launched gold coins on July 25, 2022 to stabilize its rapidly devaluing currency.
In May 2023 Zimbabwe released a gold-backed digital currency for peer-to-peer and peer-to-business transactions as well as to act as a store of value as the country’s currency continues to lose ground against major currencies.
“Holders of physical gold coins, at their discretion, will be able to exchange or convert, through the banking system… into gold-backed digital tokens,” the Reserve Bank of Zimbabwe said in a statement inviting individual and corporate entities to use the digital currency that can be bought either in Zimbabwean dollars or foreign currency.
Zimbabwe now joins other African states like Nigeria, Ghana and South Africa that have introduced digital currencies, even as several others have plans in the works.
The gold-backed digital currency is backed by a certain amount of gold, which helps keep its value stable, this currency is tied to the market value of the gold – unlike a fiat currency.
The Zimbabwe gold-backed digital currency will be used as legal tender and a store of value alongside the Zimbabwean dollar and bond notes.
Users can buy and sell it using Zimbabwean dollars and other foreign currencies.
Ideally, backing a digital currency with gold involves having a certain measure of gold reserves and depends on the current market value of gold.
The Royal Bank of Zimbabwe is $835,000,082,302,000,000 strong (13 metric tons of in ground gold estimated to yield $14 billion per annum by RBZ going forward) Central Bank Zimbabwe.
Historically, there have been major policies around currencies as legal tender in Zimbabwe, including the 2009 adoption of the US dollar after hyperinflation decimated the value of the local currency (the very reason the 2008 to 2009 Zim Dollars with its high amounts were printed – the country experienced hyperinflation that ended in 2009 where people lost all their money and savings).
In 2009 the Zimbabwe dollar was demonetized (struck off as legal tender) as the use of multi-currencies takes precedence.
Recent developments are part of a wider strategy towards an ongoing re-dollarisation process (for the same reason as Iraq is re-dinarization).
Zimbabwe is now in a process to get all the 2008 to 2009 Zim Promisary Notes (Bond) of the streets.
Now you know why Zimbabwe is re-dollarizing (reviving) their own currency, and why they pegged their Zim dollar to gold recently.
Hold on to your 2008 / 2009 Zim dollars (Bonds), the hammer will soon drop!
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