Zimbabwe Introduces New ZiG Currency Amid Crackdown on Money Changers

Zimbabwe to launch new gold-backed currency 'ZiG' in 2024 with withdrawal limits, amid ongoing crackdown on illegal forex traders, raising concerns over public trust and confidence in the new currency.

Olalekan Adigun
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Zimbabwe Introduces New ZiG Currency Amid Crackdown on Money Changers

Zimbabwe Introduces New ZiG Currency Amid Crackdown on Money Changers

The Reserve Bank of Zimbabwe (RBZ) will begin distributing a new currency called the Zimbabwe Gold (ZiG) on April 29, 2024. The new ZiG banknotes and coins will have weekly withdrawal limits of ZiG3,000 for individuals and ZiG30,000 for companies. This move comes amid an ongoing crackdown by the government on money changers in the country.

The RBZ will begin distributing the new ZiG banknotes and coins to commercial banks on Monday, with the public able to start withdrawing cash from their accounts on Tuesday. The central bank has set the weekly cash withdrawal limits to manage the initial rollout of the currency, which is backed by a combination of gold, precious minerals, and foreign currency reserves. All ZiG banknotes and coins were produced locally.

According to the RBZ, it has reserves of US$100 million in foreign currency and 2.5 tonnes of gold valued at US$185 million to support the new currency. Banks have been advised on the maximum withdrawal limits for various entities, including individuals, corporates, schools, and government. The Bankers Association of Zimbabwe president stated that financial institutions are ready for the rollout of the new currency, which is replacing the rapidly depreciating Zimbabwe dollar.

Why this matters: The introduction of the ZiG has sparked panic among citizens, as the government has already arrested scores of illegal forex money changers who were converting ZiG into US dollars at a higher rate than the government's proposed rate. The lack of confidence in the new currency and the government's failure to instill trust in it has led to the emergence of illegal forex traders, which in turn leads to inflation and loss of value of the local currency.

The government has warned that unlicensed foreign currency traders face up to 10 years in jail if convicted, and they risk losing their money and assets. The ZiG has so far only been available for online transactions. "The government has not taken steps to ensure that people will have confidence in the new currency, and the introduction of the ZiG was devoid of public consultations," a local economist noted. The government has been urged to address the trust issues and restore public confidence in the currency, as confidence cannot be legislated and has to be earned through consistent action and transparency.

Key Takeaways

  • RBZ to launch new currency 'Zimbabwe Gold' (ZiG) on April 29, 2024.
  • ZiG withdrawal limits: ZiG3,000 for individuals, ZiG30,000 for companies weekly.
  • RBZ has $100M in forex, 2.5 tons of gold ($185M) to back new currency.
  • Panic among citizens, illegal forex traders emerge, eroding trust in ZiG.
  • Govt warns illegal forex traders face up to 10 years in jail.