daniel chigunwe
Business Writer
The newly introduced Zimbabwe Gold (ZiG)’s registration with the World Bank does not translate to it being accepted by international banks, the Reserve Bank of Zimbabwe (RBZ) revealed this week.
This comes after the RBZ’s director financial markets — national payment systems and FinTech department, Dr Josephat Mutepfa, revealed the development in a circular to Bankers Association of Zimbabwe (BAZ) chief executive officer Fanwell Mutogo.
“The Reserve Bank of Zimbabwe advises that the World Bank ISO 4217 Committee has approved our request to change the Zimbabwe Currency Code from ZWL to ZWG (Zimbabwe Gold) effective June 25, 2024.
“It should also be noted that the minor units of the Zimbabwe Gold shall be denominated as ‘cents’,” Dr Mutepfa said.
Dr Mushayavanhu told Business Weekly on Wednesday that registering a currency is a mandatory procedure and does not necessarily mean it will be used in other jurisdictions.
“All currencies have to be registered with the World Bank and that is what we have successfully done with ZiG. Registration does not mean that the currency is accepted across borders.
“The Zambian Kwacha, Malawi Kwacha, Kenya shilling are all registered but you would not accept them here,” he said.
Currency registration comes after the bank introduced the new currency, ZiG, when the bank’s new governor presented the 2024 Monetary Policy Statement on April 5.
The ZiG replaced the volatile and inflation-weary Zimbabwe dollar, which had marked the reintroduction of a domestic unit of account in February 2019, following a 10-year hiatus, also caused by high inflation.
The Governor further noted that currency codes start with the country code then the currency for example South Africa country code is ZA and Rand’s code therefore is ZAR; Zambia country code is ZM currency Kwacha therefore currencyhas a code ZMK.
“Zimbabwe country code ZW, currency Zimbabwe Gold; currency code ZWG and when we had the dollar ZWD and later ZWL after revaluation. So, our currency is still called Zimbabwe Gold and shortened ZiG but currency code is ZWG,” Dr Mushayavanhu said.
According to the communication, minor units of the ZiG will be known as cents, the central bank indicated. ZiG currently has 1ZiG, 2ZiG, ZiG5, ZiG10 and ZiG20 notes in circulation while ZiG50, ZiG and ZiG 200 notes will be introduced in due course.
The currency is backed by precious metals, mainly gold, and foreign currency with a cumulative value of about US$300 million.
There’s about US$80 million worth of ZiG in circulation.
Introduced at ZiG13,66 to the US dollar, the currency traded at 13,60 on Thursday, reflecting stability that for long had evaded the Zimbabwe dollar, resulting in volatility that constantly drove prices higher.
In the world of currencies, a currency code is an international standard code (ISO 4217) that ascribes identities that distinguish currencies.
Like a SWIFT (Society for Worldwide Interbank Financial Telecommunication) code for banks, a currency code is essential for the smooth operation of international financial transactions.
Banker, Raymond Madziva noted; “A currency code provides a unique identifier for each currency, which is crucial for distinguishing between currencies that may have similar names and it also facilitates accurate and clear communication in financial transactions.”
According to the World Bank, a currency code is essential for quoting prices, invoicing and settling payments in international trade.
Bongani Ndlovu