United States economist Steve Hanke has derided Zimbabwe’s latest currency introduction, the ZiG, asserting that the country’s monetary policies resemble a merry-go-round.

The ZiG, purportedly backed by gold according to Reserve Bank of Zimbabwe (RBZ) Governor John Mushayavanhu, replaced the depreciating RTGS and Bond Notes.

Beginning at a 1:1 exchange rate with the US dollar upon its inception in 2016, the value of these notes plummeted to an alarming 1:25,000 by the time of their demonetization last week. Despite efforts to stabilize the currency, progress has been elusive.

“Zimbabwe has launched yet another new currency – the ZiG – marking the sixth attempt in the last decade,” remarked Hanke. “While the ZiG is touted to be backed by gold, the critical question remains unanswered: Where is the gold? In the realm of the ZiG, uncertainty prevails.”

Hanke’s remarks suggest Zimbabwe’s monetary strategy is akin to a zigzag, lacking in consistency and direction. As a distinguished Professor of Economics at Johns Hopkins University in Baltimore, Hanke has consistently criticized Zimbabwe’s monetary policies, expressing skepticism towards President Emmerson Mnangagwa, Finance Minister Mthuli Ncube, and the RBZ’s decision-making.

Hanke advocates for dollarization as a more stable alternative. His critique of the ZiG coincides with reports of informal businesses rejecting RTGS and Bond Notes, despite assurances from the RBZ that they remain legal tender until April 30, 2024.

In response to concerns over the rejection of old currency, Mushayavanhu released a statement reaffirming the validity of ZW$ notes until the specified date, urging businesses to continue accepting them. However, reports indicate widespread reluctance among businesses, leading to pricing adjustments and a reliance on US dollars.

Zimbabwe’s economic woes, spanning over two decades, persist unabated. Despite a brief respite from inflation during the Government of National Unity (GNU) between 2009 and 2013, subsequent monetary interventions, including the introduction of Bond Notes, have exacerbated the crisis.

Mushayavanhu’s currency experiment draws parallels to past measures, such as Gideon Gono’s issuance of Bearers Cheques and Travellers Cheques, and the deletion of zeros on a currency plagued by hyperinflation, reflecting a cyclical pattern of monetary instability.