ZiG

29.05.2024

ZiG

Why in the news?   

        Recently, to address its long-standing economic instability, the Reserve Bank of Zimbabwe (RBZ) has launched a new gold-backed currency called the ZiG.

About ZiG:

• The Zimbabwe Gold (ZiG) is a new gold-backed currency launched by Zimbabwe.
• The ZiG, now the sixth currency used by Zimbabwe, has been in circulation since April 5, 2024.
• Banks in Zimbabwe have been converting the previous national currency, the Zimbabwe dollar, into ZiGs, aiming to promote simplicity, certainty, and predictability in monetary and financial matters.

Key features of ZiG:

• The ZiG stands out as a new currency backed by gold reserves, ensuring its value is supported by the physical gold held by the government.
• ZiG notes and coins will be available and issued in denominations: 1ZiG, 2ZiG, 5ZiG, 10ZiG, 20Zig, 50ZiG, 100ZiG and 200ZiG, with the gold backing aims to provide stability and prevent currency devaluation.

Reasons for launching a new currency:

• Zimbabwe has grappled with high inflation, with rates surpassing 500% in recent years.
• Consequently, the Zimbabwean dollar, introduced in 1980, lost its value due to Following this, the country relied on various currencies, primarily the US dollar, leading to limited control over its economy.
• The collapse of the Zimbabwean dollar in 2009, with hyperinflation peaking at 5 billion per cent, marked one of the most severe currency crashes in history.

                                                                 Source: The Hindu

Ques :- Consider the following statements with reference to the ZiG currency:

Statement-I

 It is a new gold backed currency launched by the Reserve Bank of Zimbabwe.

Statement-II

 It is launched with an aim to prevent currency devaluation.

Which one of the following is correct in respect of the above statements?

A.Both Statement-I and Statement-II are correct, and Statement-II is the correct explanation for Statement-I.

B.Both Statement-I and Statement-II are correct, and Statement-II is not the correct explanation for Statement-I.

C.Statement-I is correct, but Statement-II is incorrect.

D.Statement-I is incorrect, but Statement-II is correct.

Answer A