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Zimbabwe contemplates restoring its own currency with gold backing

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Published : May 16th, 2017
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Category : Gold and Silver

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Gold Reserves to Anchor Local Currency

By Walter Nyamukondiwa
The Herald, Harare, Zimbabwe
Tuesday, May 16, 2017

The government is working on a plan to establish a gold reserve to anchor the introduction of a local currency when the right time comes for the return to the Zimbabwe dollar, it has been learnt.

This comes at a time when the country is grappling with cash shortages and economists believe that the issuance of a gold-backed local currency would help stimulate economic activity.

Modeled around the $200 million Afreximback facility, which is backing the current bond notes in circulation, the local currency, economists believe, will ease liquidity challenges and stimulate aggregate demand.

Plans to create a gold reserve involve investing in the efficient operations of the government's gold-mining firms, including the Sabi, Elvington, and Jena gold mines. ...

Mines and Mining Development Minister Walter Chidhakwa said the gold reserve would complement the Sovereign Wealth Fund, where a set of minerals would be reserved for future generations.

The legal processes that will give effect to the fund are still before Parliament.

"Naturally, in order to support the introduction of your own currency, you want to have mineral resources that you hold in reserve," said Chidhakwa. ...

Once all the companies owned by the government start operating, Chidhakwa said, they would be required to set aside part of their gold output to be kept as reserve by the Reserve Bank of Zimbabwe. ...

Confederations of Zimbabwe Industries President Busisa Moyo said a gold-backed currency was a sound economic intervention. "If it is along the lines of the Afreximbank facility, then it will give a lot of credibility to the currency because there is depressed demand for goods and products, as people have no cash," said Moyo. ...

... For the remainder of the report:

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