Zimbabwe considering gold-backed currency

[Bradley in DC]

http://www.mineweb.com/mineweb/view/mineweb/en/page504?oid=87809&sn=Detail

Zimbabwe considering gold-backed currency - Gono
The country is looking for an alternative to its hyperinflation-ravaged Zimbabwean dollar that was replaced by multiple currencies in January
Author: Nelson Banya (Reuters)
Posted: Thursday , 20 Aug 2009
HARARE (REUTERS) -
Zimbabwe's central bank governor Gideon Gono on Thursday proposed the introduction of a gold-backed local currency, which was destroyed by hyperinflation and replaced by multiple foreign currencies in January.
A unity government formed by rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai in a bid to end a political crisis introduced multiple foreign currencies to stop sky-rocketing inflation and revive the economy.
But Gono, a Mugabe ally whose reappointment last year has been opposed by Tsvangirai, says the shortage of foreign currencies in the country was hurting economic recovery efforts.
In an article he wrote in the state-controlled Herald newspaper, Gono urged the re-introduction of the Zimbabwe dollar to ease the liquidity crunch, but said this was not a call for "a blind return to the money printing press".
"Rather, what I am calling for is the guarded reintroduction of the Zimbabwe dollar where such a new currency will be fully backed by credible, tangible and locally available assets, such as gold, diamonds or platinum, among several other possibilities," Gono said.
Zimbabwe's inflation has tumbled from an official annual rate of 231m % in July 2008 -- which independent analysts say was understated -- to a monthly rate of 1% in July 2009 following the decision to abandon the local currency.

 

[pmbug]

I'd like to see it happen. Set the example, Zimbabwe.

 

[tmosley]

I fear that their government,as corrupt as it is, will simply run the printing presses, even while claiming that it is backed by gold. As such, the world will hold them up as an example of how gold standards destroy economies...

Pray it works.

 

[jclay2]

I fear that their government,as corrupt as it is, will simply run the printing presses, even while claiming that it is backed by gold. As such, the world will hold them up as an example of how gold standards destroy economies...

Pray it works.

Yeah, I can also see this happening. However, can you imagine if they did go on a gold currency and started prospering. What a story that would be.

 

[Brian Defferding]

They're going to have to do it right. This means no fraud by way of paper guarantees, and also accepting of other metals like silver and palladium. Multiple commodities and making them interchangeable will make a big difference.

 

[NewEnd]

Betting on Mugabe not conducting an economy fraudulently is like betting on 0 on the roulette table. That money won't actually be backed by gold.

It would be amazing to see a turnaround. I'll admit I am cheering for Zimbabwe, because the world bank, and the British financial system in particular, is doing all it can to punish them for breaking the shackles they had on them.

 

[hugolp]

I fear that their government,as corrupt as it is, will simply run the printing presses, even while claiming that it is backed by gold. As such, the world will hold them up as an example of how gold standards destroy economies...

Pray it works.

There is no way I am trusting Mugabe paper.

 

[georgiaboy]

yeah, they'd have to get the Swiss or someone to manage their holdings against the currency, if something like that is even possible.

 

[tmosley]

Anything is possible, for a price.

Certainly, if they outsourced their currency to a responsible bank, they might have a chance.

 

[stag15]

How about they just issue gold/silver/copper coins.

 

[Arklatex]

How about they just issue gold/silver/copper coins.

They won't do that because that would mean they are serious.

 

[Dr.3D]

How about they just issue gold/silver/copper coins.

That is the only honest way to have money.

 

[canadian4ronpaul]

this will fail, an be used as an example of why gold standard does not work

 

[SevenEyedJeff]

If they don't circulate actual gold silver or copper coins no one is going to believe the currency is backed by the metal. This seems to be the consensus of everyone here.

 

[georgiaboy]

real honest coinage ftw -- that would be so cool to see happen.

 

[RideTheDirt]

How about they just issue gold/silver/copper coins.

This was my response.
I smell fraud.

 

[pmbug]

* super necro bump *

Narrarator: They did it. They finally did it.

 

[pmbug]

Zimbabwe had a contentious election where the incumbent President Emmerson Mnangagwa was re-elected (so says the incumbent adminisrtation). Anyway, it looks like he's going to wear the crown a bit longer. He's retained the Reserve Bank of Zimbabwe Governor Dr. John Mangudya who is expanding their unpegged legal tender gold program into the digital banking world:

Zimbabwe Gold (ZiG), the digital tokens backed by gold, has gained approval as a legitimate means of payment for domestic transactions, effective immediately. Transactions involving ZiG will be processed through the ZimSwitch and RTGS systems, similar to how transactions in Zimbabwean dollars and US dollars are handled, with the availability of swipe machines.

Each ZiG unit represents 1 milligram of gold, with a current value of $377.77 or 6.14 US cents. These tokens are supported by physical gold bars held by the Reserve Bank of Zimbabwe (RBZ). To ensure that the total number of ZiGs issued by the RBZ corresponds to the amount of physical gold in its vault, external auditors will conduct audits of these holdings.

ZiGs have previously been available as an investment or store of value. However, with the recent approval, if both the buyer and seller have ZiG bank accounts and agree to use these tokens for payment, they can use them for transactions.

According to Reserve Bank of Zimbabwe Governor Dr. John Mangudya, the value of ZiG will be aligned with the value of the physical Mosi-a-Tunya gold coin and will fluctuate with changes in the international gold price since it is backed by gold reserves held by the RBZ.

The Monetary Policy Committee of the RBZ approved the use of ZiGs for domestic transactions, in addition to their value preservation function.

Banks will maintain dedicated ZiG accounts and process transactions in ZiG similarly to local and foreign currency transactions. The intermediated money transfer tax (IMTT) for ZiG transactions will be half of the IMTT for foreign currency transactions, with relevant legal instruments to be published accordingly.
...
ZiG accounts will operate alongside nostro and local currency accounts in financial institutions, maintaining milligram units and conducting transactions in the same units. The RBZ has stated that there will be no account maintenance tariffs or charges for ZiG accounts.

Financial institutions are required to price ZiG transactions fairly and responsibly for the benefit of the public, with transaction pricing being the fee charged by a bank to facilitate the transfer.

Banks are not permitted to lend ZiGs or pay interest on holdings, as the RBZ is the sole issuing bank. Changes in the amount of ZiGs in circulation will only occur through issuance or redemption by the RBZ.
...

https://bulawayo24.com/news/national/236228

...
The central bank highlighted the key points to note when transacting with ZiG which are as follows:

1. As a bank customer you approach your bank to buy ZiG tokens (denominated in milligrams) payable in ZW$ or US$.

2. Minimum purchase of ZiG by individuals is US$10 and corporates is US$5 000 or the Zimbabwean Dollar equivalent.

3. Once ZiG has been purchased, the holder will, in addition to their existing bank account, now have a ZiG account denominated in milligrams of gold.

4. The bank client can now transact using their ZiG account through swipe and online payments.

5. A holder can keep ZiG balances for transacting or store-of-value purposes with a redemption option in US$ or ZW$ depending on their preference after a 180-day vesting period.

6. Goods and services will also be priced in ZiG.

https://www.thezimbabwemail.com/ban...aunched-gold-backed-digital-payment-currency/

So it sounds like this isn't exactly a crypto token - individuals aren't in control of a crypto wallet. The banks are the wallet holders and individuals have ZiG denominated bank accounts. Transactions are effected by requests to the bank just like with currency account (when you issue a check or use a credit card).

 

[acptulsa]

Transactions are effected by requests to the bank just like with currency account (when you issue a check or use a credit card).

Or more precisely, a debit card.

The concept is outstanding. But Zimbabwe isn't exactly a name that inspires confidence in the bank.

But one wonders where else in the world a bank could operate such a service without interference.

 

[pmbug]

... Zimbabwe isn't exactly a name that inspires confidence in the bank. ...

Absolutely. I suspect that is why their experiment with the legal tender Mosi-a-Tunya gold coin has largely flown under the news radar. They are implementing a limited form of Ron Paul's old Competing Currencies bill allowing gold to compete with USD and their own currency. It's really a remarkable thing to see. There are so many ways this experiment will fizzle into a huge nothingburger (graft, corruption, too low adoption because people are poor, etc.), but if it takes off...