gtag('config', 'UA-12595121-1'); Millions of ZiG Banknotes Destroyed by RBZ Under New Governor – The Zimbabwe Mail

Millions of ZiG Banknotes Destroyed by RBZ Under New Governor

John Mushayavanhu, left, the Reserve Bank of Zimbabwe’s new governor, said April 4, 2024, that the bank’s balance sheet was healthy, with mineral reserves worth $175 million. At right is his predecessor, John Mangudya. (Columbus Mavhunga/VOA)
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The Reserve Bank of Zimbabwe (RBZ), under the leadership of its new governor, John Mushayavanhu, has discarded millions’ worth of Zimbabwe Gold (ZiG) banknotes, which were printed at significant cost. The discarded notes bore the signature of Mushayavanhu’s predecessor, John Mangudya, and Mushayavanhu did not want them in circulation.

Upon assuming office on March 28, 2024, Mushayavanhu was immediately involved in the introduction of the ZiG currency, which began trading on April 5 at an exchange rate of US$1: 13.56 ZiG. However, a substantial quantity of ZiG banknotes had already been printed and signed by Mangudya as part of the preparations to phase out bond notes introduced in 2016.

The banknotes, worth millions, had to be destroyed as Mushayavanhu preferred a clean break from the past. The destruction of these notes delayed the introduction of the new ZiG currency by almost a month, as the RBZ had to reprint the banknotes from scratch. This process was both time-consuming and costly due to the need to import the specialized paper material through third parties.

An RBZ official explained the situation:

“When Mushayavanhu came in, there were already ZiG banknotes printed in large quantities and signed by Mangudya. Mushayavanhu, who took office on March 28, 2024, instead of the expected April 30, did not want the new currency associated with Mangudya in any way, despite their collaboration during the handover process. As a result, the printed and signed notes had to be destroyed.”

The official noted that Mushayavanhu aimed to distinguish his tenure from that of Mangudya and all previous governors, reinforcing his commitment to not printing money under his watch.

At the time, market liquidity was approximately RTGS16.5 trillion (US$500 million), with around 5% of this being in cash, equivalent to about US$50 million. The destruction of banknotes signed by Mangudya was estimated to involve around US$5 million worth of currency.

Prior to this development, President Emmerson Mnangagwa had announced imminent steps to stabilize the Zimbabwean currency and address the nation’s fiscal and monetary challenges. This announcement came amidst a period of significant currency volatility and surging inflation.

Finance Minister Mthuli Ncube supported Mnangagwa’s announcement, emphasizing the importance of ongoing reforms for currency stability and economic growth.

An RBZ official further explained the complications:

“There was a liaison platform for a smooth transition between Mangudya and Mushayavanhu. Mangudya began the process, hoping his successor would continue, but Mushayavanhu wanted a fresh start, even though some ZiG notes were already printed. This led to the destruction of millions of dollars’ worth of banknotes at a substantial cost.”

With the launch of ZiG on April 5, banks were instructed to convert their Zimbabwe dollar balances into ZiG to promote simplicity and predictability in monetary affairs. However, the process was complicated by the delayed introduction of the notes, which were only available from April 30.

The new currency was set to co-circulate with other foreign currencies in the economy. Initially, eight denominations were announced for ZiG banknotes: 1, 2, 5, 10, 20, 50, 100, and 200 ZiG. Later, it was decided that the 1, 2, and 5 ZiG notes would be issued in coin form instead. ZiG banknotes began circulating on April 30, 2024.

Officials have stated that ZiG is backed by US$575 million in reserves, comprising foreign currency, gold, and other precious metals.

Source: The News Hawks