Out with the Zimbabwe dollar, in with the ZiG. Zimbabwe on Tuesday started circulating a new currency to replace one that has been battered by depreciation and often outright rejection by the people. The ZiG was introduced electronically in early April, but people are now able to use banknotes and coins. It's the southern African country's latest attempt to halt a long-running currency crisis underlining its persistent economic troubles, the AP reports. The government had previously floated various ideas to replace the Zimbabwe dollar, including introducing gold coins to stem inflation and even trying out a digital currency.
Since it was launched electronically on April 5, the ZiG—short for Zimbabwe Gold and backed by the country's gold reserves—appears to be heading down the same path of mistrust, with some government departments refusing to accept it. The ZiG is the sixth currency Zimbabwe has used since the spectacular 2009 collapse of the Zimbabwe dollar amid hyperinflation of 5 billion percent, one of the world's worst currency crashes to date. That set off a chaotic series of events: first the US dollar was allowed as legal tender, then banned, then unbanned. A new "bond note" became legal tender and the Zimbabwe dollar was reintroduced before the gold coins and digital currency were tried.
However, nothing brought any currency stability and the US dollar remains the most trusted for ordinary Zimbabweans. The government has allowed some businesses, such as gas stations, to refuse to accept the ZiG in favor of US dollars. Some departments, like the office that issues and renews passports, accept only US dollars. At the same time, other businesses are being ordered to only use the ZiG, and face punishment if they don't.
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"The government prints the money so it should be the first to accept the currency and everyone else will follow," says Gift Mugano, an economics professor at South Africa's Durban University of Technology. "Otherwise it is behaving like someone who feeds on takeaways but wants others to eat the food they cook. It becomes suspicious." Many in Zimbabwe still remember when a 100 trillion Zimbabwe dollar banknote was printed in 2009 at the height of the hyperinflation to keep up with spiraling prices. At one point, a loaf of bread cost more than 500 million Zimbabwe dollars.
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