The Reserve Bank of Zimbabwe (RBZ) has taken a significant move to solidify the Zimbabwe Gold (ZiG) as a standalone currency by applying for an International Organisation for Standardisation (ISO) code.
“The stability of the exchange rate will reflect the true value of the economy and the purchasing power of the currency, boosting domestic demand and supporting industrialisation in trade.”
Zimbabwe central bank deputy governor, Innocent Matshe
This step, announced by central bank deputy governor Innocent Matshe, aims to enhance the currency’s credibility and facilitate its integration into global financial systems.
ISO currency codes are critical in international finance, providing unique alphanumeric identifiers for currencies used in cross-border transactions.
Common examples include USD (United States Dollar), GBP (British Pound), and EUR (Euro).
These codes, established by the ISO, ensure accuracy and efficiency in global payments.
Speaking at a breakfast meeting organized by the Zimbabwe Economics Society in Harare, Matshe elaborated on the strategic importance of securing an ISO code for ZiG.
He emphasized that the success of ZiG hinges on a tightly managed monetary policy, strict control over money supply, and the creation of domestic demand for the currency.
The introduction of ZiG is seen as a pivotal measure to address economic instabilities, including currency fluctuations, exchange rates, and inflation, which have plagued Zimbabwe’s economy.
Matshe highlighted the necessity of having a stable base currency to support sustained economic growth and industrialization.
“It is essential to have an affordable base currency. We cannot sustain a dual currency situation indefinitely. Zimbabwe’s economy has been growing despite past instabilities, including currency fluctuations, exchange rates and inflation. However, we need to address these issues,” he remarked.
He stressed that the digital financial landscape is crucial for a modern economy, enabling long-term planning and investment.
Addressing concerns about foreign currency availability, Matshe assured that the country has sufficient reserves to meet legitimate demands, provided proper documentation is presented.
He also noted that the gradual introduction of ZiG into the economy was a deliberate strategy to avoid overwhelming the market and to mitigate the impacts of a parallel market that dominates a significant portion of economic activities.
“Due to the situation in our country, where a parallel market drove approximately 80% of economic activities, it was crucial to ensure that we did not supply all the new currency at once. Therefore, we limited the amount of cash injected into the economy,” he explained.
“Although challenges persist, they will evolve. Most financial institutions have received sufficient small denominations of the currency to address these issues,” he said. “The stability of the exchange rate will reflect the true value of the economy and the purchasing power of the currency, boosting domestic demand and supporting industrialisation in trade.”
In conclusion, the pursuit of an ISO code for ZiG marks a crucial step in Zimbabwe’s broader economic strategy. By establishing ZiG as a recognized and standalone currency, the RBZ aims to stabilize the economy, build trust in the new currency, and pave the way for sustainable growth and industrialization.
Contributing article: https://www.newsday.co.zw/business/article/200027220/zim-applies-for-iso-code-for-zig
