Zimbabwe Central Bank Addresses Issues with New Currency

Zimbabwe Gold (ZiG), the new currency that evolved from a gold-backed token, has shown strong performance on the foreign exchange market but encountered challenges domestically. On June 4, the Zimbabwe Reserve Bank (ZRB) announced measures to tackle the black market for ZiG and enhance its usability.

The ZRB appealed to the public via its X account, urging citizens to report illegal currency traders and businesses that refuse to accept ZiG. This effort is part of a broader campaign to curb unauthorized foreign exchange trading, which often occurs at unofficial rates. Since its introduction in physical form, ZiG has appreciated by 1.9% against the U.S. dollar, according to Bloomberg.

Mixed Success with ZiG Introduction

On May 15, South African-based Crime Watch Zimbabwe reported that Zimbabwean police had arrested 224 illegal foreign exchange traders. Additionally, the RBZ Financial Intelligence Unit (FIU) froze 90 bank accounts and fined 40 individuals. The FIU is also monitoring banking activities to identify illegal ZiG transactions.

The crackdown has reportedly led to “a significant decline in the number of illegal money changers operating in the Central Business District (CBD) of the capital Harare and surrounding areas,” according to the organization. Despite these efforts, the struggle against illegal trading continues, as indicated by the June 4 RBZ post on X.

A shortage of coins is another issue troubling the central bank. The RBZ stated in a subsequent X post that it aims to increase the availability of small denominations—ZiG1, ZiG2, ZiG5, and ZiG10—across the economy.

Starting June 10, ZiG cash will be available for withdrawal from the government-owned Homelink financial services company using debit cards in seven cities. Other financial institutions are expected to offer this service in the future.

ZiG Receives Mixed Reviews

ZiG is Zimbabwe’s sixth currency in 15 years. Backed by gold and foreign currency, it initially launched as a digital currency linked to the price of gold. Its physical form was introduced in April, receiving mixed reactions from the public.

The gold-backed token, now known as the Gold-Backed Digital Token (GBDT), faced skepticism and criticism due to its similarity to central bank digital currencies. The GBDT currently functions as an “investment instrument,” separate from the physical ZiG. Despite the introduction of ZiG, several foreign currencies remain legal tender in Zimbabwe.