WATCH LIVE as Gambakwe looks at the reaction to the new ZIG currency unveiled by the new Reserve bank of Zimbabwe governor, John Mushayavanhu this afternoon.
The new currency is called the Zimbabwe Gold (ZIG)
As expected, the market has widely rejected the new ZIG currency and there has been widespread skepticism of the launch itself. Most commentators have said that the ZIG currency is set to fail.
The biggest failure of this Monetary Policy Statement is its inability to simplify the Zimbabwe currency environment. The system is too complex and does not inspire confidence.
What has been taken away
1. The current ZWL has been taken away
2. The Foreign currency auction floor has been taken away
3. No more USD salaries for government employees.
4. The old ZIG has been taken away.
What has been added
1. The new structured ZIG currency notes have been added.
2. A new interbank forex market has been added.
3. Price discovery not explained.
4. RBZ to provide liquidity to the interbank market.
How did the market respond
1. There has been a hugely negative response to the launch.
2. There will be widespread confusion in the market.
3. There will be widespread losses arising from the new currency.
4. There will be a catastrophic collapse of the ZIG withing a short space of time.
5. If Mushayavanhu tries to crack the whip he will be thrown out.
What is missing
1. An explanation of the balances as of today. How much cash was in the market, How much was in Ecocash and how much was in bank balances.
2. An explanation on what will happen at the ATMs.
3. An explanation on Bureau De changes.
4. will the rate be allowed to float?
5.
6. Explanation on the 2% levy on electronic transfers.
7. Clear explanation on the 25% retention requirements.
8. Explanation on how much the Zimbabwe government currently owes
9. An explaination of who is printing this money.
10. An explanation of who is auditing the gold and USD reserves.
The three classes of money
1. Transactional
2. Savings
3. Debt and loans
What is the ZIG trying to solve?
1. Lack of confidence resulting in the ZWL resulting in rapid depreciation.
2. Excessive printing feeding the black market with crispy new Zimbabwe bank notes.
3. Currency speculators caught and not punished.
4. Toxic political environment is not conductive for business.
5. Low FDI
6. Low production.
7. Large number of incomplete government projects.
8. Drought.
9. High salary bill.
What needs to be done now?
1. The countdown for Mnangagwa has started.
2. The Mnangagwa government will soon collapse.
3. Eventually, sanity will prevail in Zimbabwe and only the USD will be in use.
4. An example of other African countries that have successfully implemented currencies will eventually be emulated.
