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    Zimbabwe to Replace Us Dollar With Gold-Backed Zig By 2030

    OneAfricaYTBy No Comments3 Mins Read
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    TLDR

    • Zimbabwe’s central bank has set economic milestones to be achieved before the ZiG, a gold-backed currency introduced in April 2024
    • The Reserve Bank of Zimbabwe (RBZ) said the plan involves phasing out the US dollar from domestic transactions as the country transitions to a mono-currency system
    • Key objectives include boosting foreign exchange reserves to cover three to six months of imports, reducing inflation from the current 94% to single digits by 2026

    Zimbabwe’s central bank has set economic milestones to be achieved before the ZiG, a gold-backed currency introduced in April 2024, becomes the nation’s sole legal tender by 2030.

    The Reserve Bank of Zimbabwe (RBZ) said the plan involves phasing out the US dollar from domestic transactions as the country transitions to a mono-currency system. This is the sixth attempt at currency reform since 2000.


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    Key objectives include boosting foreign exchange reserves to cover three to six months of imports, reducing inflation from the current 94% to single digits by 2026, and narrowing the gap between the official and parallel market exchange rates to below 30%. At present, reserves are enough to cover just one month of imports, RBZ governor John Mushayavanhu said.

    Under the framework, businesses and individuals will be able to keep foreign currency accounts, but local transactions will have to be settled in ZiG. Banks will remain authorized to supply foreign currency for imports, travel, and other external payments.

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    Key Takeaways

    Zimbabwe’s ZiG plan underscores the government’s push to end dollarization after years of economic instability, but its success hinges on hitting ambitious targets. Currency reforms have failed five times since 2000, undermined by hyperinflation, dollar shortages, and a lack of market confidence. The RBZ’s commitment to building reserves and stabilizing inflation reflects lessons from past failures, but inflation at nearly 100% and weak reserves highlight the uphill challenge. Businesses remain cautious, with advocacy groups calling for legal clarity and guarantees on access to foreign currency. Globally, gold-backed currencies are rare, and the ZiG is being watched as a test case for whether resource-backed money can stabilize an economy with a history of currency collapse. Unless Zimbabwe can restore trust in monetary policy and fiscal discipline, the 2030 mono-currency target risks being another unfulfilled reform.