CCZ welcomes structured currency

Harare (New Ziana) -The Consumer Council of Zimbabwe (CCZ) has welcomed the introduction of a structured currency, called the Zimbabwe Gold (ZiG), saying it will instill confidence in the local unit, whose predecessors rapidly lost value, to the extent of being abandoned.

A “structured currency” is a currency that is pegged to a specific exchange rate or currency basket and ZiG shall always be anchored and fully backed by a composite basket of foreign currency and precious metals (mainly gold) reserves.

According to official data, the ZiG is supported by RBZ asset reserves, which include 2.5 tonnes of gold (worth US$185 million) and US$100 million in cash.

The entire ZWL$ 2.6 trillion, or US$90 million equivalent, in reserve assets is sufficient to cover all of the reserve money in the system. These reserve assets total US$285 million.

CCZ chief executive officer Rosemary Mpofu said the assurance by the central bank that the country has more than sufficient reserves to back the newly introduced currency and that money supply will be tightly monitored and matched with the available reserves, was also a positive move.

“This move is expected to decrease the appetite for the US$ which consumers used to demand mainly to store value. Moreover, most retailers and wholesalers had already started preferring transacting in foreign currency mostly US$ and this had made lives difficult for the ordinary consumer, especially those earning in the local currency,” she said.

She said the introduction of the Zimbabwe Gold (ZIG) was also set to address price distortions as most price variations emanated from a volatile exchange rate and the speculative pricing models that some suppliers were using in anticipation of local currency depreciation.

Mpofu also applauded the central bank’s proposal to make it mandatory for companies to settle at least 50 percent of their tax obligations on Quarterly Payment Dates (QPDs) in ZiG, saying initiation of the demand for the ZiG by the policymakers or higher authority sets precedence and indicates confidence in the newly introduced currency, and the market is bound to follow suit.

She said to boost confidence in the local currency, as well as send a clear signal to the region and globe that the ZiG is a real and acceptable currency and thus speed up its acceptance in the international markets, all government departments including the passport office, fuel stations, the Vehicle Inspection Department (VID) and the Zimbabwe Revenue Authority among others, should take the lead and demand payments of their services in the local currency

Zimbabwe launched the new currency on 5 April this year at an exchange rate of 1 USD to 13.56 ZiG.

Electronic transactions in ZiG started on April 8, while the physical notes and coins will be released on April 30 to allow the RBZ to conduct an awareness campaign on their key security features.

ZiG banknotes will be issued in denominations of 10ZiG, 20Zig, 50ZiG, 100ZiG, and 200ZiG while the coins will be half ZiG, 1ZiG, 2ZiG and 5ZiG.

New Ziana