Mushayavanhu unveils new currency | Business Times

 

CLOUDINE MATOLA AND TENDAIISHE NYAMUKUNDA

The Reserve Bank of Zimbabwe (RBZ) governor, Dr John Mushayavanhu, Friday unveiled the new structured currency called called Zimbabwe Gold (ZiG) as part of series policy   initiatives  to deal with rising inflation, unstable exchange rates and restore economic stability.

 

Dr. Mushayavanhu stated in his monetary policy statement that the country’s valuable metal reserves, which are primarily made up of gold, as well as foreign exchange reserves in the Nostro account will underpin the new currency.

 

 

“The structured currency that we are introducing as Zimbabwe is going to be backed by a basket comprising foreign exchange that we already hold in our nostril account, and precious metals that we are collecting as royalties from precious minerals that are being mined in this country. And we are holding these as reserves at the central bank and these comprise mostly gold.

 

“So, with effect from today (Friday) all banks shall convert the current Zimbabwe dollar balances into the new currency, which shall be called the ZiG.

 

“To foster simplicity, certainty, predictability in our financial affairs. The new currency will co-circulate with other foreign currencies in the country,” Dr Mushayavanhu said.

 

He added that, all business are expected to change their pricing to ZiG with immediate effect.

 

“All domestic traders are expected to consistently modify their pricing systems in line with the current reforms.

 

“With immediate effect, prices for goods and services shall be converted using the conversion rate that I mentioned earlier on, and thereafter put it in ZiG for the transacting public’s convenience,” Dr Mushayavanhu said.

 

He also said:”Within seven days from today, all entities other than banks and MNOs are expected to have completed the configuration of their systems for direct business usage,

 

“On conversion, of all current Zimbabwe dollar balances, banks are directed to rename all the Zimbabwe dollar accounts as ZiG accounts. In other words, what used to be RTGS and operating under the RTGS platform is now ZiG.”

 

Furthermore, he said the swap rate will be guided by the closing interbank exchange rate, and will be used to make legitimate conversions of all Zimbabwe dollar balances in the banking sector.

 

Dr Mushayavanhu added that all Zimbabwean dollar notes should be surrendered to banks within 21 days and they will be credited into ZiG accounts.

 

“All Zimbabwe dollar notes and coins, held by account holders, will be credited into the ZEIT accounts using the applicable conversion rate, conversion factor,

 

“The banks will continue to accept these deposits for a period of 21 days after today. The Reserve Bank has made special arrangements for those in the outlying areas who may not have bank accounts, and we have made arrangements for POSB and AFC commercial banks, and they will take their cash to these banks, and that cash will be converted to ZiG,

 

“However, if anyone is going to bring notes with above $100,000, we need to know where you got it and why you have been keeping it,” Dr Mushayavanhu said.

 

Gold-backed digital tokens accounts, which were previously known as ZiG, will no longer be known as ZiG, but will be known as gold-backed digital token accounts or GBDT accounts. So there is that demarcation. Gold-backed digital tokens are not ZiG currencies.

 

Dr also revealed that the central bank has abandoned the foreign currency auction system and adopted the market determined exchange rate system .

 

“The auction system has been replaced by a refined interbank foreign exchange market under a willing-buyer-willing-seller(WBWS) trading arrangement. Following this development, a transparent price discovery mechanism is now in place in the interbank market. The Bank will continue to provide trading liquidity to the market using the 25% surrender portion from export proceeds,” Dr Mushayavanhu said.

He also said in order to foster demand for the local currency, Government will make it “mandatory for companies to settle at least 50% of their tax obligations on Quarterly Payments Dates (QPDs) in ZiG”.

 

In addition, the central bank, Dr Mushayavanhu said will continue with its strict liquidity management in order to mitigate against shocks that cause spikes in the exchange rate.”

 

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