Zimbabwe began its transition to a new gold-backed currency, the ZiG, on Friday. While the country adjusts to the ZiG, US dollars and existing Zimbabwean dollar notes remain in use for a temporary period.
The Reserve Bank of Zimbabwe (RBZ) announced the new currency on Friday and financial institutions immediately started converting customer Zimbabwe dollar balances into ZiG. Banks anticipate completing this process by April 12th. Point-of-sale systems and mobile money platforms were unavailable on Saturday as adjustments were made for the ZiG. By contrast, banks expect electronic transactions to resume by Tuesday as the national electronic payments platform, Zimswitch, finalizes its system update.
Public Has 21 Days to Convert Old Currency
Zimbabweans have 21 days to exchange their Zimbabwe dollar notes for ZiG, with the official conversion rate set at 2498.7242 ZW$ to 1 ZiG (as of April 8th, 2024).
The RBZ will introduce ZiG notes and coins in denominations ranging from 1 ZiG to 200 ZiG, with additional half and quarter ZiG coins. The rollout will be gradual to ensure sufficient change is available for small transactions and minimize reliance on vouchers.
Retailers are currently accepting only US dollars and Zimbabwean dollar notes. However, they are busy converting prices to the new ZiG currency and most are expected to be ready to transact in ZiG by Monday.
The Bankers Association of Zimbabwe confirmed that banks are reconfiguring all Zimbabwe dollar accounts. Some banks will retain existing account numbers for ZiG balances, while others may create new accounts. ZiG accounts are expected to be operational at most banks by Monday.
The Zimswitch platform will be reactivated once banks have completed converting account balances. The exact timing will vary depending on each bank’s progress.
Economists believe the gold-backed ZiG has the potential for better performance compared to its predecessor due to its physical reserves. The introduction of the ZiG is part of a broader strategy to address inflation and achieve macroeconomic stability.
The ZiG replaces the Zimbabwe dollar, which has suffered from rapid depreciation in recent months. The new currency is backed by the RBZ’s holdings of precious minerals, primarily gold, and foreign currency reserves. As of last Friday, these reserves included US$100 million and 2.5 tonnes of gold (valued at US$185 million).
