Marapira Publishes Reasons To Trust ZiG Currency
14 April 2024
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What is the ZiG?

The new currency of Zimbabwe is called the ZiG, which stands for Zimbabwe Gold. This currency is representative money, meaning it is backed by gold and foreign currency reserves. Representative money is a medium of exchange, either printed or digital, that represents something of value. In contrast, fiat money is a type of currency that is not backed by any tangible asset but is declared as currency by the government. Since the end of the Bretton Woods system in 1971, major currencies around the world have become fiat money as they are not backed by anything of value.

The concept of the ZiG is not new at all. Historically, representative money followed commodity money, which was when money itself was made of substances that had value, such as gold, copper, and silver coins. Since representative money is backed by a tangible asset like gold or silver, its value remains relatively stable over time, pegged against the value of reserves and guaranteed by it.

In contrast, fiat money, which predominates in today’s society, lacks intrinsic value. Its value is based solely on trust and confidence in the government and the public. Another drawback of fiat money is the risk of inflation. Since fiat money is not tied to a tangible asset, governments have the ability to increase the money supply at will, leading to inflationary pressures. This erosion of purchasing power can adversely affect individuals and businesses as it reduces the value of their savings and income.

Reasons to trust the ZiG

The introduction of the ZiG currency, which combines the advantages of representative money with the convenience of digital currency, holds promise in addressing the challenges posed by fiat currencies. This stability will enhance confidence in the local currency and reduce reliance on foreign currencies, thus increasing its usage and acceptance. There is no reason not to trust the ZiG.

Excessive bank charges, which previously eroded deposits, have been reduced to be below interest rates, allowing deposited money to gain interest. These reforms, coupled with a stable and sustainable exchange rate, policy credibility, and restoration of market confidence, will lead to a stable and sustainable macro economy as outlined in Vision 2030. It is also noteworthy that the reserves already held by the Reserve Bank are more than triple our local currency requirements.

S.I. 60 of 2024, in addition to introducing the new currency, provides for independent audits of the reserve assets backing it by credible and respected external auditors specifically appointed for that purpose. The results of these audits will be published in the annual report of the Reserve Bank of Zimbabwe. Transparency will be key in building and maintaining the public’s trust in their new currency.

Companies will be required to settle at least 50% of their tax obligations on Quarterly Payment Dates (QPDs) in ZiG. Money supply growth will also be strictly monitored and implemented in line with improved economic activity and increased reserves in the form of precious minerals, mainly gold, and foreign currency balances.

Banks are being encouraged to undergo accelerated digital transformation. This will enable banking institutions to achieve operational efficiencies, which will have a positive impact on various banking service charges.

The ZiG, by its very nature, minimizes the risk of inflation. As the value of representative money relies on a physical valuable commodity, the government cannot simply print more money. This reduces the chances of inflation and preserves the purchasing power of the currency, benefiting individuals and businesses.

Zimbabwe is one of the top five growing economies in Africa. Furthermore, our GDP has increased from USD 16 billion to USD 47 billion. These statistics, confirmed by international institutions such as the IMF, can only indicate a bright future for our nation and its currency.