Zimbabwe Gold (ZiG) currency future (Economist Insights)

The Zimbabwe Gold (ZiG) currency was launched in April 2024 with the promise of bringing stability to Zimbabwe’s economy. It replaced the failing Zimbabwean dollar and was said to be backed by gold and foreign reserves. One year later, the future of the ZiG still raises many questions.

Government Says ZiG Is Working

The Reserve Bank of Zimbabwe (RBZ) says the ZiG is stable and widely accepted. They say it’s backed by $629 million in reserves, including 2,771 kilograms of gold. The RBZ also says money supply is now under control, and the illegal exchange rate gap has gone down.

RBZ Governor John Mushayavanhu believes the ZiG is helping control inflation and create a stronger financial system. He says they are planning to print better-quality ZiG notes to increase public trust, and that Zimbabwe is moving towards using only the ZiG by the year 2030.

But People Still Don’t Trust It

Even though the government says the ZiG is working, many Zimbabweans don’t agree. Most people still use US dollars in shops, markets, and for paying rent. Only about 35% of transactions are in local currency. This shows that the public does not fully believe in the ZiG.

In the past, Zimbabwe has had many failed currencies—like bearer cheques, bond notes, and RTGS dollars. These collapsed because of high inflation and bad government policies. Now, many worry that the ZiG will follow the same path.

Experts Say Bigger Reforms Are Needed

Economists say that just changing the currency is not enough. Zimbabwe needs bigger reforms to fix its economy. These include:

• Fighting corruption
• Creating a fair and open business environment
• Respecting property rights and the law
• Allowing independent decisions on money matters
• Making sure elections and government systems are free and fair

Without these changes, any currency—even one backed by gold—will not be trusted by the people or investors.

What’s Next for ZiG?

Right now, the ZiG has dropped in value by nearly 50% since it launched. The government hopes to reduce inflation to under 30% by the end of 2025 and grow the economy by 6%. But many think these goals are too optimistic.

Unless Zimbabwe deals with the real problems in its economy, the ZiG may just become another failed currency in the country’s long history.