Let’s talk about the ‘structured ZW$’ that’s on the way now that we know a little about it

Leonard Sengere Avatar

Earlier this month, we got a surprise announcement that Zimbabwe would be introducing a structured currency. We speculated on what that could be and were way off. The Minister of Finance later clarified and we have been stewing on it and gauging the market response.

Finance Minister Mthuli Ncube said the structured bit just means that the ZW$ will be linked to a hard asset like gold. Kind of like how the gold tokens are linked to gold, but different.

See, with the gold tokens, there is (supposed to be) physical gold stored in a vault somewhere and tokens released into the market all have physical gold backing them up. Meaning there is a kilogram of physical gold in a vault for every token worth a kilogram of gold.

So, essentially, you are holding gold when you hold the token. That is if you can trust that there indeed is gold to back up the token.

It’s a bit different with the structured ZW$. There will not be physical gold to correspond with each ZW$ in the market.

Rather, the amount of ZW$ that can be released into the market is limited by the growth of the hard asset that the ZW$ is linked (anchored) to.

So, if the ZW$ is anchored to gold, the growth in money supply will be limited by the increase in the price of gold on the world markets.

So, the structured currency is a mix of a fiat currency, in that it’s value still derives from trust in the govt’s regulations and the RBZ’s monetary policies, and a commodity-backed currency in that if you squint, it looks like it’s value is linked to gold’s.

It’s not commodity-backed but is trying to mimic being so.

Mthuli said work is still ongoing on how to actually structure the whole thing.

The issue of trust

As the outgoing RBZ governor noted years ago that all efforts to fix the currency mess the country has been in for ages have been undone by the absolute zero level of trust Zimbabweans have in their govt and its central bank.

So, it is a positive step that the govt will not be able to arbitrarily increase the money supply, which has been leading to inflation and the devaluation of the ZW$. However, we still have to trust that what we’re told is actually what’s on the ground.

We all had to ask the same questions when it came to the gold-backed tokens. We have to trust that the audits we see are legit and that the gold exists.

With the structured ZW$, a currency board will be created to monitor it, hurray for more govt jobs. We will have to trust that the figures they report are accurate. What is the actual money supply? – is not something we can definitively answer even though the RBZ releases that data.

Or maybe the numbers are trustworthy but we’re skeptical for no reason. Still, that highlights the problem of trust even more clearly. Without that trust, it doesn’t matter that money supply growth is limited, we will still shun the structured ZW$.

The market is wary

The ZSE Technician, which analyses the performance of the Zimbabwe Stock Exchange and the Victoria Falls Exchange noted the following, in the week following the clarification on what the structured currency is about:

This week was bearish; there were losers than gainers in both exchanges resulting in significant losses. If we combine both exchanges, they lost approximately 10,2%. The poor performance can be attributed to many factors including liquidity crisis, uncertainty over structured currency (and) decline in trading volumes.

The market doesn’t know what to think of the coming structured currency. How will the general public respond to it? How will it affect the exchange rate in the short term? What will it mean for USD use?…

Maybe some of this uncertainty will be eased when the govt releases more details on how the structured ZW$ will look.

I wonder what you think of the structured currency. Do you think it will lead to a better outcome than the mess that we have right now?

Also read:

54 comments

  1. JCK

    One word! Gedye!

    1. Nkosiyezwe

      As long as it will not pay for duties, fuel, passports etc it has already failed before it’s introduction!!

      1. sadney

        Zimbabweans are tired of these useless bank notes titles from the Gono area , and what we know now is any other currency other than the USD is not worth trusting. Besides, the gvt’s policy inconsistency will have a negative impact on whatsoever currency reform they try to implement. E.G when Mtuli Ncube came into the scene, many had higher hopes which has faded over his performance in the time served so far

  2. Peter

    It will fail as usual, No one trusts this government, in fact it can never be trusted.

  3. Okonko

    As long as the ZW$ is not able to buy fuel, you are just playing games .
    Our zw$ will still be worthless if we can not use it to buy fuel mark my words. If you can make modalities as to make RTGS buy essential commodities then you can win. Else a law should be there that prohibits USD$ buy in shops and filling stations but deposited in banks or bureau de change in exchange for or Zw$ then we can get a result. A stable currency will enamate from that.
    Do not waste time and resources trying to fix this currency issue. You really know that it won’t work as long as the zw$ is not buying fuel.
    If you are to do anything, work with petrol and diesel purchases.
    The governor knows it and all those involved knows.
    It seems they are doing a bhora musango game unknown to the head of state .

    1. M2

      I 100% agree with you. It’s that simple. Additionally as long as it can’t be changed to other currencies (USD, ZAR, EUR, etc) on the fly, for example when you travel or shop online then we are repeating the same game and hoping for a different outcome.

    2. Anonymous

      The real issue is no one ever takes ownership, never ever raises their hand to say I failed. When this currency fails, it will be blamed on everything else from locusts, LH44 current form, Panama canal drought and our favorite sanctions. Its never corruption, or simply government failure.

      Bond notes were supposed to be backed by $50 million bond

    3. Anonymous

      Unknown to the president how? Is he asleep

  4. Prince

    “Anchored” – my foot!
    *Everybody knows what happened to the ‘Bond Note’ which was ‘backed by Afrexim Bank loan and guaranteed 1:1’
    Anchored – they said!

    1. Graham

      Correct. 💯 percent

    2. Hooking Fell

      As if that idiot knows what it’s talking about! It’s simply using jargon to brow-beat citizens, most of whom are too stupid to realise this. After all, you just have to look at what most of them have been stupid enough to vote for…

  5. David Doc Domingo

    What’s so exceptional about Zim??
    “The gold standard is not currently used by any government. Britain stopped using the gold standard in 1931, and the U.S. followed suit in 1933, finally abandoning the remnants of the system in 1973.”
    Read More
    https://www.investopedia.com/ask/answers/09/gold-standard.asp#:~:text=The%20gold%20standard%20is%20not,of%20the%20system%20in%201973.

    1. Richard Turpin

      Whatever standard rbz and zpf use, it won’t make the slightest difference. All rbz will do, on instruction from zpf, is print more money, and in higher denominations! That or using ecocash, telecash etc. They still need to pay all those gooks from the so-called “liberation struggle”, although their numbers must be dwindling now, fund their jaunts to the AU, UN and others, as well as give increases to the over-staffed and useless civil service!
      That said, as citizens can’t be bothered to give change a chance, and haven’t done so in over four decades, don’t expect miracles here! They simply won’t happen, and the zw-wotsit will crash again, and soon!

    2. Gen. Tekeshe

      What’s exceptional about Zimbabwe is we have over 40 minerals in the ground, we have barely scratched the surface in terms of mining. Our resources can save us. I stead of going for a 40Bn foreign loan that may or may not be squandered and has to be paid back at interest, we have more than 400Bn* in the ground. Now comes the true test when we want to exchange our money for the Gold that it’s worth and or buy all sorts of stuff with it. Always half baked, the idea is good, but…..

  6. delaine

    a great piece of reporting thanks for the clarity but as usual the zw$ will fail

  7. Denzil

    their is nothing wrong with with all currency but creating a new currency can not solve our problems that we have but if they do not represent the currency properly the new currency will end up as bond note

  8. Tafadzwa

    inga picture iro ndi Uebert angel🙀

    1. 😎

      Haasi, Uibert Angel uyo, mface uye wokumbo mutsva ne mumwe pastor, prophet🙄, paakange afa

  9. Anesu

    The problem with the our government is that they are trying to address a symptom of bad governance rather than the actual underlaying root problem. Currency is not the problem, what needs to be addressed is the fact that value addition is little to non existent in our country, we do not produce for ourselves nor for export and it’s all consumption on our part. Secondly, the huge elephant in the room is corruption. The people at the top obviously benefit from the status quo and wouldn’t want to change the current system to one that effectively scrutinizes them for their lack of accountability. Currency was changed many times before and I highly doubt this will be the last time. Until our government introduces measures and incentives for businesses to formalize, innovate and produce value, and until government culture shifts from individual selfishness to valuing selfless service and integrity, they can keep changing the names from bearer cheques to special agro cheques to bond notes to RTGS dollars to the whatever comes after that but the fact of the matter is, new currencies alone will NEVER fix the economy problem in Zim.

    1. Tawanda

      Let’s start by returning the 2010 – 2016 US$ pensions and savings, then we can talk

  10. Tawanda

    Let’s start by returning people’s 2010 – 2016 US$ pensions and savings, then we can talk

  11. Doomed from the start

    Napoleons & squealers taabho navo. Corruption just needs to be punishable regardless of the office.

  12. Chimusoro

    What a load of crap hogwash it will never work coz no one in his or her right state of mind can trust these guys ever

  13. Kelvin

    1. If you have USD in the bank , get it out
    2. If you have bond in the bank get it out
    Learn or Persih

    1. Reasons

      We learnt.
      1. USD gets chopped by banking charges and it might end up being converted into some funny currency
      2. Bond loses value every day. Never mind the ridiculous bank charges

  14. Poor

    On e ɓitten twice shy. Call it whatever you want. We are poor today because of these policies.

  15. Anonymous

    Useless measures as long as zanupf is in power. Remove Zanupf!!! Then !! Maybe!!! Zimbabwe can attempt to start to get better!!
    As long as we are led by greedy murderers, people who are pigs and animals!! The country will always be doomed!!
    Vadara Ava !!! Maonne!! Kana vafa vese!
    Bho!! Ndiyo!!
    Mwari ngakomborera!!!

    Until then!! Aah shame !! Cry the people cry!!
    Hapana zvino buda !!

    Takutongwa nedzimbwa wevanhu!!!

  16. GODFREY..

    The best ways to make and keep money is
    1) through crypto
    2) Surplus cash dont use banks rather buy gold strore home. No matter how small the quantities.
    Zim always operate along the same script election after election.

  17. Anonymous

    Govt and the RBZ to restore trust in Zimbabweans for any currency reforms to be successful, people have no trust in both the govt & reserve bank.

    1. Anonymous

      We are tired of changing zim currency notes, only trying to protect the selfish & greed politicians & their close allies. Stop the rot/corruption first then restore confidence in people, maybe you can start currency reforms

  18. Ben

    I would prefer to have physical gold coin which i can sell when need arise

  19. Tokwe

    The currency has to be convenient, that is, it does not have to be limited when doing transactions. It has to be accepted wherever one wants to transact. It has to be a real currency that is recognised and can be exchanged for other currencies at the bank worldwide.

    1. Anonymous

      I wonder when the big bosses will run out of stupid ideas does not matter what you call the ZWL it is ZWL nobody in the market will accept it can you pay imports with it? Can you put it on a card and use it out of zim? All bulls***. Focus on the strong currency like the us and when our industry recovers and we are on full production restore a local strong currency

  20. Always Off Topic

    This obsession with the Zim $ has reached new levels. The hole they are digging for themselves is getting deeper and deeper.

    Now they think they can induce confidence in the local currency by simply associating it indirectly with gold. This is one for the history books. Prof Ncube has reinvented the “Gold standard”. If it works , he will be a shoe in for a Nobel Prize. Alas, you see what he is trying to do here. By throwing in words like “hard asset” and “gold price” he is hoping that this will fool people into thinking Zim $, some how derives its value from this “asset”. Even though there is no tangible link at all. Think about it, why the gold price, why not the price of maize, cotton or tobbaco or literaly anything else.

    Managing monetary supply growth in this manner could be dangerous. It adds uncertainty in that, the gold price could easily surge unexpectedly, thereby exposing us to external forces we have no control over. The Zim $ is still being weighed down by RBZ shenanigans, percieved poor governance of the state and in my opinion, ( the chief culprit) the structure of our monetary system (this multicurrency hybrid thingamy, its even worse now that there are more local currencies !!!).

  21. Allan Makoni

    THE ECONOMY OF ZIMBABWE IS A CAPITALISM ECONOMY. IT IS DEVELOPED BY MONEY AND DESTROYED BY MONEY.
    WHAT AM I GETTING AT?? YOU MIGHT ASK.
    ZIMBABWE IS A COUNTRY WHICH CAN SELF SUSTAIN 100%. WE HAVE A LOT OF LAND FOR FOOD PRODUCTION, A LOT OF MINERALISED LAND FOR MINING, A LOT OF LAND FOR PROCESSING INDUSTRIES FOR AGRICULTURAL/MINING RAW MATERIALS. WHAT CAUSED THE INSTABILITY IN OUR ECONOMY AT FIRST WAS INDEED INTERNATIONAL RELATIONS BUT THAT ENDED A LONG TIME AGO.
    WHAT REALLY KILLED US WAS THE USE OF MULTI-CURRENCIES. THE TERMS “BANK RATE” AND “STREET RATE” RUINED US.

    WHAT WE NEED IS TO DO AWAY WITH THE USE OF MULTIPLE CURRENCY OPTIONS THAT WAY WE DONT HAVE PEOPLE EXTRACTING A CERTAIN AMOUNT OF INFLUX FOR THEIR PERSONAL GAIN AS THAT CREATES IMBALANCE.

    IF THE NEW CURRENCY IS INTRODUCED, THE GOVERNMENT HAS TO COME UP WITH A WAY TO MAKE SURE THAT ONLY BANKS CAN HAVE ALLOWED INTERCHANGE OF CURRENCIES. WE USE OUR NEW INTRODUCED CURRENCY AND IF ONE NEEDS TO PURCHASE SOMETHING FROM A DIFFERENT COUNTRY YOU GO TO THE BANK AND GET YOUR DESIRED CURRENCY BUT IN ZIMBABWE ONLY 1 CURRENCY SHOULD BE USED.

    THAT WAY THE ZWD$ WILL GAIN SOCIAL CONFIDENCE AND TRADE CONFIDENCE.
    WE NEED TO UNDERSTAND ONE THING MY DEAR ZIMBABWEANS. ZIMBABWE IS NOT A ROMANTIC GET AWAY COUNTRY LIKE FRANCE OR GREECE, IT IS A GROUND FOR EXTREME ECONOMIC GROWTH AND WE HAVE UNIMAGINABLE POTENTIAL.

    TRANSPARENCY, HONESTY AND UNDERSTANDING THAT ZIMBABWEANS MATTER MOST THAN ANY OTHER INTERNATIONAL RELATIONS WILL HELP CERTAIN PEOPLE IN THE GOVERNING POSITIONS.

    EXPOSE ZIMBABWEANS TO HOW OUR COUNTRY ACTUALLY SURVIVES WITHIN A CIRCLE OF SANCTIONS, DONT KEEP IT SECRET, ITS NOT SUPPOSED TO BE TOP SECRET, WE ARE ACTUALLY SELF SUSTAINING BUT ITS THROUGH INBALANCE

    1. Richard Turpin

      Quote: “ZIMBABWE IS A COUNTRY WHICH CAN SELF SUSTAIN 100%.”
      Correct, Allan, BUT, with destructive, murderous zpf at the helm, and greedy stupids like chamisa, bleating and fighting tooth and nail, just to keep their one seat, it won’t happen! Zimbabwe used to be able to feed itself AND had some to top-up the SADC grain reserve. That’s no longer the case. Farming and the downstream industries it once supported have either drastically scaled back, or have, in some cases, gone under, due to zpf’s murderous thugs, coupled with the stupidity and greed of certain opposition members, AND the citizens of Zimbabwe, who have, since 1985, done sod-all, to get rid of destructive, murderous, zpf and given change a fighting chance! It’s all self-inflicted harm, greed and stupidity, none of which are fixable.

    2. macco

      I hope you must go to draw board n wat Yu saying is for the elite not there pple we gat no trust at all they destroyed our trust many year ago ,check Nssa pension where eroded ,investments etc wat kind of life Yu want Zimbabweans to experience let them be free economically don’t disturb them by introducing undesirable Zim currency .I hope there education had failed us alot we don’t know wat we doing.

  22. Lewis slai

    We just need that money

  23. Velicoraptor

    Doing the same thing every few years expecting different results, theres a word for that. The government is no longer in control of the economy. People are creating a parallel zombie economy that sucks the life out of the other because it doesn’t produce. Not really it’s mostly retail. Middle men adding costs to the most basic of exchanges. Mthuli thinks he can tax his way back into a better position but the government is too corrupt and inefficient. Big wigs and their mistresses have developed expensive tastes. It’s going to spiral until ultimately the economy forces political action. Brace yourselves it’s going to get rough.

  24. Sandilie

    Well, if it is as organised and easy to use as the new ZIMRA SSP/TaRMS, all will be tickety boo.

  25. KPT

    🤣🤣🤣🤣😅 zw $, bearer cheques, RTGS,BOND, ZW$,……..gold coins that you never see or take,………and these …….more bonded ZW$. Now why would anybody have trust issues or be sceptical?

  26. Tawona tb Tawo

    The zw$ should be acceptable in international markets and international banking sector for it to be a good currency. The international markets shouldn’t doubt t and should facilitate trade internationally wc include duty payments, cross border lending, local lending by affiliates and should facilitate lending by affiliates established in third world economies.

    Furthermore; adequate information should b made avaliable to various stakeholders wc include citizens; local and international banking sector; the international markets both money and capital markets.

  27. Czechpeplaz Kceshim Opep

    I am sorry to say this but I’ve lost trust in our government and it’s leaders. I think Africa as a whole continent MUST PUBLISH to the WHITE COMMUNITY that AFRICA IS LOOKING FOR A FINANCE AND RESOURCES MANAGER because our elders have failed completely.
    What’s happening in Zimbabwe is the same as what’s going on in Congo it’s unfortunate that in Zimbabwe we are fighting in our own minds and die slowly and silently because we don’t use guns

  28. Th

    Fixing economy of Zimbabwe using monetary policies z wastage of time, let’s protect and support local manufacturing firms.

  29. Christopher

    Heard it all before. The smiling crocodile only has his eyes above the water bluffing he’s a 🐸

  30. Michael Souris

    RBZ and ZPF will just print money regardless! They’re still paying a bunch of gooks their so-called “pensions”, among other wasteful things. Still, as you stupid citizens won’t get rid of the problem, and give a credible alternative a chance, expect more and worse! After all, you stupids allowed it to happen…

  31. Nicholas Tinashe Mbutsa Mukuchura.

    “A-aah!!!”On my own point of view! Education is the key to success.so I urge all creation to try study and be literally civilized Zimbabwe.

  32. David Lee Chimushonga

    As long we don’t have a negative attitude towards our currency reforms we will succeed. It’s only a matter of time. The famous US dollar will be useless. Other countries are now using their own currency why not us

  33. sadney

    Zimbabweans are tired of these useless bank notes titles from the Gono area , and what we know now is any other currency other than the USD is not worth trusting. Besides, the gvt’s policy inconsistency will have a negative impact on whatsoever currency reform they try to implement. E.G when Mtuli Ncube came into the scene, many had higher hopes which has faded over his performance in the time served so far

  34. Pamela Katerere

    Will this money be recognised internationally? Will it be used to buy fuel and all goods that are imported?
    If so, we are in the right track

  35. macco

    Remember ,the only solution is the USD nothing else got trust of the pple.RBZ must not consider it’s moves worth while becoz of corruption no trust is placed at all cost.

  36. macco

    I hope you must go to draw board n wat Yu saying is for the elite not there pple we gat no trust at all they destroyed our trust many year ago ,check Nssa pension where eroded ,investments etc wat kind of life Yu want Zimbabweans to experience let them be free economically don’t disturb them by introducing undesirable Zim currency .I hope there education had failed us alot we don’t know wat we doing.

  37. S.P.C.Muringi.

    Inflation is a true measure of how much suffering the people are going through. The higher it rises the more painful the ordinary man’s life becomes. Until the country rebuilds its industry it would benefit the people to use the US dollar as the only currency.

  38. acco

    my question is on expenditure and the trust where by the government had destroyed over the years

Join Waitlist We will inform you when the product arrives in stock. Please leave your valid email address below.