Zimbabwe’s Currency Strategy: ZiG Notes Linked to Reserves Before Printing

Central bank Governor John Mushayavanhu has made it clear that Zimbabwe will refrain from printing additional ZiG notes unless they are supported by adequate reserves. Mushayavanhu emphasized the necessity of backing any increase in currency circulation during a meeting in Bulawayo, echoing directives from the president to ensure responsible monetary policy.

The introduction of the ZiG, or Zimbabwe Gold, on April 5 marked the nation’s sixth attempt to establish a viable local currency. Unlike its predecessors, the ZiG is fully backed by gold and a mix of foreign currencies, aiming to provide stability amidst economic challenges. This strategic move follows consultations with the World Bank and local business groups, including the Confederation of Zimbabwe Industries and the Zimbabwe Chamber of Mines.

Addressing concerns over alternative currency strategies, such as currency revaluation or full dollarization, Busisa Moyo, chairman of the Zimbabwe Investment Development Authority, highlighted the advantages of adopting the ZiG. Meanwhile, the central bank plans to bolster its gold reserves through royalty payments from miners, targeting an annual addition of approximately 2 tons of bullion.