OVER 90 percent of banking institutions and mobile bank service providers have successfully configured their systems and processes in line with the new monetary policy guidelines, paving the way for smooth public transactions using the newly introduced Zimbabwe Gold (Zig) currency.
Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mushayavanhu, said this yesterday as he commended the overwhelming response and enthusiasm from the business community and the public who have readily embraced the new ZiG currency. The Central Bank introduced the new structured currency last Friday as part of comprehensive monetary measures aimed at consolidating economic stability, arresting inflationary pressures linked to market indiscipline in the previous years and facilitating solid business growth anchored on savings.
A structured currency refers to a currency that is pegged to a specific exchange rate or currency basket and backed by a bundle of foreign exchange assets including gold.
Under this model, the Central Bank can only issue domestic notes and coins when fully backed by a foreign “reserve” currency or foreign exchange assets and the currency is fully convertible into the reserve currency on demand.
According to the RBZ, the structured currency is different from the Zimbabwean dollar in that it is anchored by a composite basket of foreign currency and precious metals, mainly gold held as reserves for this purpose by the Reserve Bank.
ZiG notes
While the market readies to commence digital transactions anytime from now, the RBZ has said the new ZiG notes and coins will start circulating at the end of the month with denominations of 1, 2, 5, 10, 50, 100 and 200 notes and coins for half and a quarter ZiG. Retailers and service providers, including the Bulawayo City Council, have since switched their prices to ZiG, while some banks have already notified clients through generic messages that the conversion process has been completed and will soon resume normal business. In a statement, Dr Mushayavanhu expressed satisfaction with the conversion progress by the banking sector and payment service providers.
“Commendably, over 90 percent of the banking institutions and mobile bank service providers have successfully configured their systems and processes from ZW$ to ZiG, with banking services now being accessible for the convenience of the transacting public,” said Dr Mushayavanhu.
“The Reserve Bank is also encouraged by the positive response and enthusiasm from the business community and the public at large to embrace and use ZiG.”
The new Apex Bank boss also noted public concerns emanating from the rejection of the ZW$ notes by some business players because these were being demonetised. The development has resulted in the unavailability of change, thus, forcing businesses, mainly commuter omnibuses to round off prices to US$1, torching widespread outcry from commuters.
“In this context, the Reserve Bank would like to reiterate that the ZW$ notes currently in circulation are still valid and remain legal tender until 30 April 2024. Accordingly, the ZW$ notes should continue to be used for transactional purposes at the announced ZiG/ZW$ conversion factor of 2498.7242,” said Dr Mushayavanhu. He said business entities where the notes have been widely used, including commuter omnibuses, shops, fresh vegetable markets, and vendors, should continue accepting payment in ZW$ notes until April 30, 2024. The 21-day transitional period before the issuance of the ZiG is meant to facilitate extensive educational and awareness campaigns.
Already, ZiG strengthened on Tuesday by 0,2 percent compared to the opening exchange rate of 13.5611 on Friday, demonstrating the positive impact it carries.
“For the avoidance of doubt, the Bank advises the public and businesses that the Know Your Customer (KYC) transaction limit of ZW$100 000 does not apply to proceeds from legitimate business transactions during the transition period to 30 April 2024,” said the RBZ Governor.
“The Reserve Bank wishes to advise the public that the educational and awareness campaign on the transition from the ZW$ to the use of ZiG in the market is currently underway and expected to be all-inclusive, reaching out to a wider spectrum of society by the 30th of April 2024, in line with the Bank’s financial inclusion strategy.”
To curb mismanagement and excessive money supply growth, the Apex Bank has pledged to strategically manage this through a disciplined culture in sync with improved economic activity and increased reserves in the form of precious minerals (mainly gold) and foreign currency balances.
The new structured currency is anticipated to restore confidence in the local currency and hence safeguard the multi-currency system, which, to date, has served the country very well.
This will go a long way in fostering simplicity, credibility, certainty,and predictability in monetary and financial affairs. The structured currency and the accompanying monetary policy measures will bring price and exchange rate stability to the economy.
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