Zimbabwe Needs Its Own Cryptocurrency
Simply issuing another fiat currency will not enable Zimbabwe to overcome its ongoing currency crisis, which is rooted in an utter lack of government credibility. The best way to revive economic growth would be to abandon a government-run monetary system altogether.
ADDIS ABABA – When Zimbabwe’s President Robert Mugabe was deposed in November 2017, after 30 years in power, many hoped that the economic decline he had overseen would soon be reversed. But, a year and a half later, the economy is showing no signs of recovering, thanks to an ongoing currency crisis. Could a blockchain-based cryptocurrency be the cure for what ails Zimbabwe?
Just over a decade ago, Zimbabwe was beset by such severe hyperinflation – which peaked at 89.7 sextillion percent in November 2008 – that it abandoned its currency altogether, adopting instead a basket of international currencies, led by the US dollar. But acute dollar shortages drove up prices, spurring the government, in 2016, to introduce its own banknotes and coins that were supposedly worth the same as US dollars.
Due to lack of confidence, however, the new money traded at a significant discount on the black market. With dollars continuing to flow out of the country at a faster rate than they flowed in, the government recently merged its currency and all electronic money into yet another new unit: the Real Time Gross Settlement (RTGS) dollar.