Reserve Bank of Zimbabwe launches new ZiG “structured” currency

The Reserve Bank of Zimbabwe (RBZ) launched a new “structured” currency called “Zimbabwe Gold” (ZiG) that will be anchored to a weighted value of the central bank’s precious metal (mainly gold) and foreign currency reserves. As of April 5, 2024, the RBZ had reserve assets of US$100 million in cash and 2,522 kgs of gold (US$185 million) to back the entire local currency component of reserve money which stood at ZW$2.6 trillion (US$90 million). ZiG notes and coins shall be issued in denominations made up of 1ZiG, 2ZiG, 5ZiG, 10ZiG, 20Zig, 50ZiG, 100ZiG, and 200ZiG, but no mention is made of what becomes of the ZiG (now GBDT) wallets, assuming such wallets ever existed. [Read more at the RBZ]

There’s a bit of funky history here, because in May 2023, the RBZ introduced Gold-Backed Digital Tokens (GBDTs) that were pegged to gold prices and fully backed by physical gold held by the RBZ. Apparently, in July 2023, the GBDT was renamed “Zimbabwe Investment Gold” (ZiG) and in October 2023 the RBZ advised that the ZiG will become one of the “means of payments” for domestic transactions, at which point I designated the ZiG as a central bank digital currency (CBDC) in my CBDC tabulation. Now the RBZ has renamed existing ZiG accounts GBDT accounts to be used for their original investment instrument purposes, rather than as a medium of exchange.

So are GBDT accounts CBDC when it appears they’re no longer intended as a medium of exchange? The Bank for International Settlements (BIS) definition of CBDC, and the one I use, is that “a CBDC is a digital payment instrument, denominated in the national unit of account, that is a direct liability of the central bank“. The new GBDT are clearly direct liabilities of the central bank, but are they still payment instruments and units of account? And I still have a question as to whether the old ZiG was ever actually activated and used as a retail CBDC. Can anyone out there confirm or deny that?

A primer on Bitcoin cross-border flows: Measurement and drivers

The IMF published a paper that uses raw Bitcoin data covering both on-chain (on the Bitcoin blockchain) and off-chain (outside the Bitcoin blockchain) transactions globally to gain a better understanding of cross-border Bitcoin flows. It finds that Bitcoin cross-border flows respond differently than capital flows to traditional drivers of capital flows, and differences appear between on-chain and off-chain Bitcoin cross-border flows. Off-chain cross-border flows seem correlated with incentives to avoid capital flow restrictions. [Read more at the IMF]

Kiffmeister’s central bank digital currency monthly monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.