Zimbabwe is a fascinating case study of money.
The market trusts the American Dollar.
The Government can't launch a new stable fiat currency because the market has lost faith and trust in the currency's issuer and backer, the Zimbabwe government.
If the market lost trust and faith in the United States Government, issuer and backer of the American Dollar fiat currency, what would replace the dollar and would the United States Government be able to re-establish a market-accepted fiat currency?
Is it possible that even a gold standard could not save the American Dollar after markets lost trust and faith in the United States Government?
https://www.aljazeera.com/news/2024/10/24/zimbabwes-gold-backed-currency-loses-half-its-value-why-and-whats-nextZimbabwe’s gold-backed currency loses half its value: Why and what’s next?Six months in, the gold-backed ZiG touted as a solution to the currency crisis is struggling to win confidence.By Al Jazeera Staff
Published On 24 Oct 2024
Less than six months after Zimbabwe launched yet another new currency, it was forced to devalue it, signalling new challenges for the Southern African country’s efforts to stand up a local currency and reduce dependency on the United States dollar. ...
... But in late September, authorities slashed the value of the new gold-backed currency by more than 40 percent. ...
What happened?On September 27, the Reserve Bank of Zimbabwe (RBZ) slashed the value of the ZiG by 43 percent, taking it from 13.56 ZiG to the US dollar at its launch to 24.4 ZiG to the dollar. The currency has further weakened to 27 ZiG this week.
The bank was forced to make the move after widening gaps emerged between the official and unofficial exchange rates of the ZiG as the currency was going for about twice the approved rate on the black market.
Despite the devaluation, there are still huge gaps between official and parallel rates: By October 23, the ZiG was pegged at 40 to 50 to the dollar on the black market, according to the price monitoring website Zim Price Check.
Local businesses and retailers forced to trade with the ZiG at the official rate had reportedly warned authorities that they would close their stores if the rate differences are not tackled, according to reporting by the BBC. ...
