Dr. John Mushayavanhu, the new head of the Reserve Bank of Zimbabwe (RBZ), surprised many on Thursday when he revealed that, despite previous claims, the bond notes and Zimbabwe dollar were not supported by the US dollar bond facility from the African Export-Import Bank (Afreximbank), based in Cairo.
This contradicts what Dr. John Mangudya, the former RBZ governor, had previously stated, asserting that the bond notes were backed by a US$200 million Afreximbank facility.
However, the government stopped using bond notes and coins in 2019 when they reintroduced the Zimbabwe dollar.
Last week, President Emmerson Mnangagwa’s administration replaced the Zimbabwe dollar with a new currency called the Zimbabwe Gold (ZiG).
Speaking at the Confederation of Zimbabwe Industries Monetary Policy Review Breakfast Meeting on Thursday, Dr. Mushayavanhu emphasized that ZiG is the currency of the future because it is backed by foreign currency reserves, gold, and other valuable metals.
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“Previously, the bond note had no backing,” Dr. Mushayavanhu explained. “We never had a policy where our local currency was supported by reserves. Consequently, we did not have enough reserves to support the currency. There were times when the amount of money in circulation exceeded the reserves held by the central bank. This is something we have addressed by introducing the structured currency (ZiG).”
Dr. Mushayavanhu also disclosed that as of April 5, 2024, the RBZ had foreign currency holdings totaling US$100 million in cash and 2,522 kilograms of gold valued at US$185 million to support ZiG.
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