Return of a gold backed currency could begin in Zimbabwe as government looks at finally stabilizing Zimdollar
The African nation of Zimbabwe has long been the poster child of fiat currency failures. It first began when Mugabe hyper-inflated their ‘dollar’ in the late 1990’s, and then was followed by the country simply going on a U.S. dollar standard that failed during the years leading up to, and following the 2008 financial crisis.
Then more recently Zimbabwe has tried to tether their currency to the RMB with limited results.
So after three failed attempts to stabilize their monetary system over a 20 year period it appears that President Mugabe is now considering a return to a gold standard, and could be the first country in over 45 years to back their money with precious metals.
Government is working on a plan to establish a gold reserve set to anchor the introduction of a local currency when the right time comes for the return to the Zimdollar, it has been learnt.
This comes at a time when the country is grappling with cash shortages and economists believe the issuance of a gold backed local currency would help stimulate economic activity.
Modelled around the $200 million Afreximbank facility, which is backing the current bond notes in circulation, economists believe the local currency will ease liquidity challenges and stimulate aggregate demand.
Plans to create a gold reserve involve investing in the efficient operations of Government’s gold mining firms, including Sabi, Elvington and Jena gold mines.