In April, the Reserve Bank of Zimbabwe (RBZ) announced a new currency called ZiG, backed by gold, to curb high inflation. However, the currency has suffered from trust issues, and economists say rebuilding trust is the decisive factor in stabilizing the economy, not issuing new coins. .

What is ZiG?

In 2009, Zimbabwe legalized the use of foreign currencies such as the US dollar and British pound to cope with monthly inflation of up to 79.6 billion percent. Since then, the country has experimented with six different currencies in the past 15 years, but all have failed.

ZiG's Goal

On April 5, RBZ Governor John Mushayavanhu announced that banks would convert existing Zimbabwean dollar balances to ZiG. The new currency is backed by $575 million in gold, foreign currency reserves, and other minerals. Mushayavanhu expects ZiG to help curb inflation and protect people's savings.

The Issue of Faith

Zimbabwe has experienced failures in currency replacement, leading to huge losses in people's savings. Many people still remember the collapse of the Zimbabwean dollar in 2008 when $100 trillion in notes became worthless. Economist Steve Hanke measures Zimbabwe's annual inflation at 1,191%, the highest in the world. This increases skepticism about ZiG's ability to succeed.

Community Response

The transition to ZiG was difficult, with many businesses and individuals refusing to accept the new currency. On social networks, this coin has become the subject of many memes and ridicule. Some economists say the imposition of ZiG is a move that violates property rights and only adds to desperation.

Conclude

The introduction of ZiG, a gold-backed currency, is an attempt by Zimbabwe to curb inflation and stabilize the economy. However, issues of trust and people's skepticism towards new monetary policies are a big challenge. Rebuilding trust and confidence in the financial system is essential for the new currency to truly succeed.