The Reserve Bank of Zimbabwe: A Guide

The Reserve Bank of Zimbabwe is the central bank of the country, responsible for maintaining the stability of the Zimbabwean dollar. It was established in 1983.

The bank's headquarters is located in Harare, the capital city of Zimbabwe. The Reserve Bank of Zimbabwe is overseen by the Ministry of Finance and Economic Development.

The bank's primary objectives include maintaining price stability, promoting economic growth, and ensuring the stability of the financial system. These objectives are outlined in the Reserve Bank of Zimbabwe Act of 1983.

The bank has a range of tools at its disposal to achieve these objectives, including setting monetary policy, regulating the banking sector, and managing the country's foreign exchange reserves.

The Reserve Bank of Zimbabwe has a rich history dating back to the Reserve Bank of Rhodesia, which was founded on May 22, 1964.

The Reserve Bank of Rhodesia was a direct successor to the Bank of Rhodesia and Nyasaland, which was liquidated in 1963 at the collapse of the Federation of Rhodesia and Nyasaland.

Prior to 1956, the region was served by the Central African Currency Board, established in 1953 as the Southern Rhodesia Currency Board in 1938 to provide Rhodesian currency backed by the British pound sterling.

The Southern Rhodesia Coinage and Currency Act of 1932 established the local currency for Southern Rhodesia, Northern Rhodesia, and Nyasaland.

The Reserve Bank of Rhodesia continued to function and grow through various changes in sovereignty and governmental structure, eventually becoming the Reserve Bank of Zimbabwe at independence in 1980.

The Reserve Bank of Zimbabwe has launched a new gold-backed currency called ZiG, which aims to stabilize the economy and shield citizens from currency fluctuations and soaring inflation.

The ZiG currency is backed by Zimbabwe's gold reserves, which account for nearly 25% of total exports in January 2024. This move comes as the Zimbabwean dollar, or RTGS, has lost three-quarters of its value this year.

Citizens have been given a 21-day window to exchange their old cash for the new currency, while the US dollar, which constitutes 85% of transactions, will remain legal tender during this transition period.

The new ZiG banknotes will be issued in denominations of 1, 2, 5, 10, 50, 100, and 200, with coins backed by Zimbabwe's gold reserves also being introduced to address the scarcity of US coins.

However, some experts have raised concerns about whether Zimbabwe's reserves are sufficient to adequately back the currency and whether it could be vulnerable to fluctuations in gold prices.

The Reserve Bank of Zimbabwe has devalued its gold-backed currency, the Zig, by over 40% against the US dollar, indicating that the last ditch effort to stabilize the country's volatile economy is in trouble.

This devaluation is due to an increase in demand for the US dollar, which is also legal tender, and comes after warnings from large retailers of store closures if the rate remained fixed at the previous level.

The Zig was launched over six months ago and is the country's sixth currency in 25 years, with the government struggling to wean the population off the US dollar.

The Reserve Bank of Zimbabwe has a unique leadership structure, with the Governor serving as the chief executive officer and being accountable to the Minister of Finance and Economic Development.

The Governor is appointed by the President of Zimbabwe for a five-year term, with the option of reappointment.

The Reserve Bank of Zimbabwe has a decentralized operations model, with a presence in all 10 provinces of the country, ensuring that financial services are accessible to all Zimbabweans, regardless of their geographical location.

The Reserve Bank of Zimbabwe has taken a crucial step in maintaining economic stability by keeping interest rates at 35%. This decision comes after a significant currency devaluation.

The finance minister has guaranteed the use of the US dollar through 2025, providing a sense of stability for businesses and individuals. This move is likely to have a positive impact on the economy.

The Reserve Bank of Zimbabwe will also be minting gold coins, which could be a smart move given the current economic climate.

The Reserve Bank of Zimbabwe has had its fair share of leaders over the years. Desmond Krogh served as the transitional governor from 1980 to 1983.

Let's take a look at the list of governors to see who was in charge:

The Reserve Bank of Zimbabwe plays a crucial role in the country's economy, and its operations are a key part of this.

The bank's most important role is to create and enact monetary policies, which is a complex task that requires careful consideration of the country's economic situation.

As the only producer of Zimbabwe's bank notes and coins, the Reserve Bank regulates the amount of money in circulation, although its ability to control money supply is limited due to the use of foreign currencies for domestic transactions.

The Reserve Bank also looks after the country's gold, purchasing and refining precious minerals like diamonds, gold, and silver through its subsidiary Fidelity Printers and Refinery.

The bank serves as an advisor to the government, providing daily banking services and promoting financial inclusion policy, which is essential for the country's economic growth.

Here are some key facts about the Reserve Bank's operations: