Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Panonetsa Mangudya has refuted claims that the country’s local Zimbabwean Dollar currency is backed up by physical Commodities Like Gold or silver But rather By The very Zimbabwean Government that issued it.
Addressing the Parliamentary Portfolio Committee on Defence, Home Affairs and Security, the Reserve Bank Of Zimbabwe Governor said, “It is not true that our currency is backed by gold. It was the United States dollar which was last backed by gold in 1971 and that has since changed. Our currency is backed by a robust fiat currency. We have in excess of one billion United States dollars of that back up and 2.4 billion United States dollars which are enough to back our currency.”
This debate has been necessitated by ZimDollar’s propensity to lose value everyday against major currencies and almost every other currencies out there.
Critics say the Zimbabwe dollar was prematurely reintroduced before the country had met all the fundamentals.
In light of such sentiments that the local currency is losing value against other currencies, especially the United States dollar at a very paced rate, RBZ Governor
Dr Mangudya added that, “Contrary to the assumption that the Zimbabwe dollar is backed by gold, the country’s local currency, just like others in the world, is backed by fiat currency.”
A fiat currency is a government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it.