The World Bank has certified the Zimbabwe Gold (ZiG)'s international currency code (ZWG), giving it a distinct identity among other nations' official currencies, the Reserve Bank of Zimbabwe (RBZ) said.
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 yesterday, reflecting stability that for long had evaded the Zimbabwe dollar, resulting in volatility that constantly drove prices higher.
Zimbabwe has been using ZWL as its official currency code for the now replaced Zimbabwe dollar.
This comes after the bank introduced the new currency, ZiG, when the bank's new Governor Dr John Mushayavanhu 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.
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 25 June 2024.
"It should also be noted that the minor units of the Zimbabwe Gold shall be denominated as 'cents'," Mr Mutepfa said
Mr Mutogo said the correspondence was just an administrative issue that does not change anything about the current operations.
"This is a normal process, it is just telling you that now the ZIG currency is recognized as ZWG, all along the Zimbabwean currency was denoted by ZWL," Mr Mutogo said.
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.
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Banker Mr Raymond Madziva said, "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.
"The currency code also supports the global financial system by ensuring that financial instruments, contracts, and transactions are correctly denominated.
"In summary, a currency code is crucial for the effective functioning of the global financial system. It ensures standardization, accuracy, and efficiency in international financial transactions, trade, and investment. Not having a currency code can lead to significant challenges, including errors, inefficiencies, and barriers to international trade and investment," Mr Madziva added.
However, to minimise administrative hiccups, the RBZ said the ZWL will continue to be used until the end of August 2024.
"The codes ZWL and ZWG will run concurrently from the 25th of June to the 31st of August 2024 to allow necessary system configurations by players. In this regard, the ZWL currency code will cease to be recognized from the 1st of September 2024," Dr said.
The RBZ said all banking sector players must therefore make necessary arrangements to facilitate a smooth transition to the new currency code, ZWG.
