Zimbabwean ZiG currency, the art of genius OR sign of desperation.

The ZiG Currency gyration:

Zimbabwe economy management and current stabilisation does not need an economic genius, it just requires prudent leadership. A leadership that makes the right decision at the right time, based on knowledge and wisdom, the current ZANU PF leadership is a mockery of such a proposition.

Where did the gold standard backing- idea came from and are there any countries using such economic instrument?

·       Backing a currency against gold is no innovation, in fact it was established in 1944 under the Bretton Wood system, which allowed pegging of currency against gold, it suited the period of post-world war economic crisis.

·       The system was discontinued in 1971, described as volatile and technically risk as it introduces too many variables.

·       Zimbabwe is the only country in the 21^st century to have introduced a gold standard backed currency.

·       Introducing stone age macroeconomic strategies to solve 21^st century and futuristic globalised world is mundane ignorance least and stupidity at most.

Who then made decision to recloak Zimbabwe to the 20^th century currency, discarded by out for fathers as not fit for purpose?

Could it be that the Zimbabwean leadership has the most scholarly cabinet yet not learned, devoid of knowledge application and wisdom? It seems the current leadership lacks exposure and capacity to synthesize and make an informed decision. They should have known that gold standard pegging is not new and has no place in the futuristic macroeconomics of the 21^st century and beyond. Such naivety will cost Zimbabwe its dreams of becoming ever a middle economy and its competitiveness in SADC.

 

Disadvantage of a fixed exchange rate:

·       It is subjected to too much government intervention, in the event of weak institutions, it is a catalyst for corruption.

·         It stifles supply and demand

·       It stripes the central bank of its independence as an arbiter of monetary policy

·       The fiscal policy becomes the first line of defence instead of monetary policy, making interventionism slow, bureaucratic and outdate.

 

What are plausible effective macroeconomic policies?

·       Fiat currencies not backed by any volatile precious metals

·       Floating exchange rate, responsive to the market forces, of supply and demand.

·       Response to globalised gyration of currencies

Where forward for Zimbabwe?

·       Improve on consumer confidence index

·       Improve on Business confidence index

·       Favourable investment climate to attract FDI

·       The restoration of rule of law

·       To deal with corruption index 24/100, which is one of the lowest in Sub-Saharan-Africa (Transparency International, 2024)

 

Zimbabwe need New Leadership and NOT New currency. Why is it that none of our neighbours have abandoned their currency and yet flourishing?

Elliot Pfebve is an academic and an investment consultant.