Zimbabwe will replace the devalued national dollar and introduce a new ZiG currency backed by gold and a basket of foreign currencies. According to IMF estimates, over 16 years, inflation in the country amounted to 500 billion percent. Bloomberg writes about this.
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ZiG – short for Zimbabwe Gold – will officially be put into circulation on April 8.
The Central Bank also sets the discount rate to 20%. The previous rate of 130% was the highest in the world.
The radical move is Zimbabwe's sixth attempt since 2008 to create a functional local currency. The International Monetary Fund estimates that over 16 years, Zimbabwe's inflation was 500 billion percent. Local money has become almost worthless.
The current Zimbabwean dollar has lost four-fifths of its value on the official market since the start of the year, making it the second-worst currency in the world.
To restore public confidence, ZiG will be fully backed by a combination of gold and other precious metals, as well as foreign exchange reserves held by the central bank.
Reserves currently include $100 million in cash and 2,522 kilograms of gold worth $185 million.