News / National
Annual independent external audit for RBZ reserves
11 Apr 2024 at 03:32hrs | Views
Independent external auditors shall audit Reserve Bank of Zimbabwe (RBZ) precious minerals and foreign currency reserves backing the country's new currency, Zimbabwe Gold (ZiG), once a year as part of measures authorities have put in place to rebuild confidence in the local currency.
The bank said this following concerns in certain quarters that authorities could issue currency beyond resources or reserves anchoring it or may not even keep the resources as promised.
But the central bank gave assurances via a statement yesterday that safeguards were in place to ensure that every bit of the framework put in place to ensure stability and success of the new currency in tackling the country's economic challenges remained intact.
Reserve Bank of Zimbabwe Governor Dr John Mushayavanhu unveiled Zimbabwe's new medium of exchange when he presented the 2024 monetary policy statement last Friday, his first after being appointed to the job about a fortnight ago.
The legal provision, Statutory Instrument 60 of 2024, was also gazetted last Friday to give effect to the new structured currency, which replaces the inflation-weary Zimbabwe dollar.
ZiG notes and coins would be issued in denominations of 1ZiG, 2ZiG, 5ZiG, 10ZiG, 20Zig, 50ZiG, 100ZiG, and 200ZiG, which will be distributed through the normal banking channels.
The coins shall be introduced in due course.
Following the launch, gold coins and Gold Backed Digital Tokens (GBDTs) previously known as ZiG would remain only as investment instruments.
ZiG is backed by a basket of precious commodities, mainly gold and foreign exchange reserves.
These include US$100 million in cash and 2 522 kg of gold (US$185 million), against local currency reserve money of $2,6 trillion, requiring full (100 percent) cover of gold and cash reserves amounting to US$90 million.
Dr Mushayavanhu said the gold and cash reserve holdings currently with the bank represent more than three times cover for the local currency being issued.
According to the bank, ZiG shall at all times be anchored and fully backed by a composite basket of reserves comprising foreign currency and precious metals (mainly gold), received by the Reserve Bank.
The mineral reserves were part of in-kind royalties collected by the bank and kept in the vaults of the apex bank. Foreign currency balances will be accumulated through market purchases from the 25 percent surrender requirements of exporters and the sale of some precious metals received as royalties.
The ZiG currency would be legal tender in Zimbabwe, operating alongside other currencies prescribed in the RBZ Act under a multi-currency system, which included the US dollar, Euro, Rand, Pound Sterling, and Yen, among others.
It would also be used for accounting and other purposes, including the discharge of financial and contractual obligations and the valuation of assets and liabilities.
Responding to enquiries from various members of society, following the launch of the new currency last Friday about what guarantees had been put in place to ensure the minerals and funding backing the currency remained in place, the central bank said a law was already in place and requires independent external accounting experts to audit the bank once a year with the results made public.
"The legal instrument (SI 60 of 2024), introducing the structured currency, provides that the reserve assets backing it shall be subject to independent audit once in a calendar year by external auditors specifically appointed for that purpose and the results of such audit shall be published in the annual report of the Reserve Bank," the bank said.
The central bank also said it had both operational and instrument independence through its board of directors and Monetary Policy Committee (MPC).
"The board provides the necessary oversight while the MPC is empowered to formulate and prescribe policies independently. The bank is also protected against interference by the provisions of the RBZ Act," the bank added.
To engender transparency and accountability, the bank said it would ensure strict adherence to the statutory limit on bank lending to the Government as stipulated in the Reserve Bank Act.
Furthermore, the bank said tight monetary and fiscal policies would be maintained to guarantee the sustainability of the structured currency.
"Implementation of strict liquidity management will assist to smoothen liquidity shocks that cause spikes in the exchange rate," it said.
According to the bank, the structured currency and the accompanying monetary policy framework will ensure price and exchange rate stability, critical for value preservation.
In addition, the central bank said the containment of inflation would ensure the maintenance of positive real interest rates, which encouraged savings in the economy.
The bank said the new structured currency was anticipated to restore confidence in the local currency and safeguard the multi-currency system, which the bank noted had served the country well.
"This will go a long way in fostering simplicity, credibility, certainty, and predictability in monetary and financial affairs. The structured currency and the accompanying monetary policy measures will bring price and exchange rate stability to the economy," the bank said.
As a local currency that has just been launched, ZiG had not yet achieved convertibility, but the central bank said it would work to strengthen the currency to attain full convertibility, consistent with the regional agenda for macroeconomic convergence under the SADC Protocol on Finance and Investment.
While consumers would at this point not be able to purchase fuel using the new currency, with the current pricing mechanism in the fuel sector remaining in place until reviewed, the central bank said the Government would work towards wider use of ZiG, which would eventually see the fuel sector being encouraged to accept ZiG for fuel purchases.
In the transitional period, the central bank said banking institutions would continue to accept deposits of Zimbabwe dollar banknotes for 21 days after April 5, 2024. The apex bank indicated it had made special arrangements for those without bank accounts to swap their Zimbabwe dollar notes and coins at POSB and AFC Commercial Bank within 21 days.
To ensure that all businesses are on board, all other businesses outside banks and mobile network operators would be allowed seven days from April 5, 2024, to fully configure their systems to transact in ZiG.
The bank said this following concerns in certain quarters that authorities could issue currency beyond resources or reserves anchoring it or may not even keep the resources as promised.
But the central bank gave assurances via a statement yesterday that safeguards were in place to ensure that every bit of the framework put in place to ensure stability and success of the new currency in tackling the country's economic challenges remained intact.
Reserve Bank of Zimbabwe Governor Dr John Mushayavanhu unveiled Zimbabwe's new medium of exchange when he presented the 2024 monetary policy statement last Friday, his first after being appointed to the job about a fortnight ago.
The legal provision, Statutory Instrument 60 of 2024, was also gazetted last Friday to give effect to the new structured currency, which replaces the inflation-weary Zimbabwe dollar.
ZiG notes and coins would be issued in denominations of 1ZiG, 2ZiG, 5ZiG, 10ZiG, 20Zig, 50ZiG, 100ZiG, and 200ZiG, which will be distributed through the normal banking channels.
The coins shall be introduced in due course.
Following the launch, gold coins and Gold Backed Digital Tokens (GBDTs) previously known as ZiG would remain only as investment instruments.
ZiG is backed by a basket of precious commodities, mainly gold and foreign exchange reserves.
These include US$100 million in cash and 2 522 kg of gold (US$185 million), against local currency reserve money of $2,6 trillion, requiring full (100 percent) cover of gold and cash reserves amounting to US$90 million.
Dr Mushayavanhu said the gold and cash reserve holdings currently with the bank represent more than three times cover for the local currency being issued.
According to the bank, ZiG shall at all times be anchored and fully backed by a composite basket of reserves comprising foreign currency and precious metals (mainly gold), received by the Reserve Bank.
The mineral reserves were part of in-kind royalties collected by the bank and kept in the vaults of the apex bank. Foreign currency balances will be accumulated through market purchases from the 25 percent surrender requirements of exporters and the sale of some precious metals received as royalties.
The ZiG currency would be legal tender in Zimbabwe, operating alongside other currencies prescribed in the RBZ Act under a multi-currency system, which included the US dollar, Euro, Rand, Pound Sterling, and Yen, among others.
It would also be used for accounting and other purposes, including the discharge of financial and contractual obligations and the valuation of assets and liabilities.
"The legal instrument (SI 60 of 2024), introducing the structured currency, provides that the reserve assets backing it shall be subject to independent audit once in a calendar year by external auditors specifically appointed for that purpose and the results of such audit shall be published in the annual report of the Reserve Bank," the bank said.
The central bank also said it had both operational and instrument independence through its board of directors and Monetary Policy Committee (MPC).
"The board provides the necessary oversight while the MPC is empowered to formulate and prescribe policies independently. The bank is also protected against interference by the provisions of the RBZ Act," the bank added.
To engender transparency and accountability, the bank said it would ensure strict adherence to the statutory limit on bank lending to the Government as stipulated in the Reserve Bank Act.
Furthermore, the bank said tight monetary and fiscal policies would be maintained to guarantee the sustainability of the structured currency.
"Implementation of strict liquidity management will assist to smoothen liquidity shocks that cause spikes in the exchange rate," it said.
According to the bank, the structured currency and the accompanying monetary policy framework will ensure price and exchange rate stability, critical for value preservation.
In addition, the central bank said the containment of inflation would ensure the maintenance of positive real interest rates, which encouraged savings in the economy.
The bank said the new structured currency was anticipated to restore confidence in the local currency and safeguard the multi-currency system, which the bank noted had served the country well.
"This will go a long way in fostering simplicity, credibility, certainty, and predictability in monetary and financial affairs. The structured currency and the accompanying monetary policy measures will bring price and exchange rate stability to the economy," the bank said.
As a local currency that has just been launched, ZiG had not yet achieved convertibility, but the central bank said it would work to strengthen the currency to attain full convertibility, consistent with the regional agenda for macroeconomic convergence under the SADC Protocol on Finance and Investment.
While consumers would at this point not be able to purchase fuel using the new currency, with the current pricing mechanism in the fuel sector remaining in place until reviewed, the central bank said the Government would work towards wider use of ZiG, which would eventually see the fuel sector being encouraged to accept ZiG for fuel purchases.
In the transitional period, the central bank said banking institutions would continue to accept deposits of Zimbabwe dollar banknotes for 21 days after April 5, 2024. The apex bank indicated it had made special arrangements for those without bank accounts to swap their Zimbabwe dollar notes and coins at POSB and AFC Commercial Bank within 21 days.
To ensure that all businesses are on board, all other businesses outside banks and mobile network operators would be allowed seven days from April 5, 2024, to fully configure their systems to transact in ZiG.
Source - the herald
