Zimbambwe Gold Backed Crypto(ZiG)

Zimbabwe introduced a gold-backed digital currency called the Zimbabwe Gold (ZiG) in addition to physical gold coins. Although both are related in their use to stabilize the economy they have clear distinction.

Here’s how the ZiG, the gold-backed digital currency, fits into the picture:

Digital Form: Unlike the physical gold coins, the ZiG is a digital form of currency.
Backed by Reserves: The ZiG is backed by a composite basket of reserves held by the Reserve Bank of Zimbabwe, which includes foreign currencies and precious metals, primarily gold. The RBZ has stated that the ZiG is fully backed by these reserves.
Introduction: The ZiG was officially introduced on April 8, 2024, as a new local currency to replace the Zimbabwean dollar, which had been suffering from rapid depreciation. The name “ZiG” was inspired by the previously issued gold-backed digital tokens, which were then renamed “gold-backed digital tokens (GBDT)”.
Purpose: Similar to the gold coins, the ZiG aims to provide a more stable currency, anchor price and exchange rate stability, and boost confidence in the local currency. It is intended to function as a store of value, a unit of account, and a medium of exchange.
Circulation: Electronic ZiG commenced circulation in April 2024, with physical ZiG notes and coins following shortly after.
Convertibility: Holders of physical gold coins can, at their discretion, exchange or convert them into gold-backed digital tokens (GBDT) through the banking system.
Challenges: Despite its gold backing, the ZiG has faced challenges, including depreciation against the US dollar since its launch and limited adoption in the informal sector, which makes up a significant portion of Zimbabwe’s economy. There have also been reports of difficulties in exchanging ZiGs for US dollars.

Relationship between Gold Coins and ZiG:

The gold coins and the ZiG are both part of Zimbabwe’s strategy to manage its currency issues. The gold coins offer a tangible, direct link to the value of gold, while the ZiG is a broader digital currency that is also backed by gold (along with other assets). The existence of physical gold reserves is meant to underpin the value and stability of the ZiG.