Of legal tenders, identity and value

Zimbabwe has now introduced the Zimbabwe Gold (ZiG) currency that will be backed by the country’s gold reserves as it was when bank were originally introduced.

The constructivist ontology posits that reality is based upon norms and ideas we collectively agree to be real. Therefore things like currencies and legal tender are only as real as we allow them to be. 

Bank notes of different currencies including; the United States dollar, the British pound, the South African Rand and so forth, have no physical value in themselves. 

They are just colorfully printed pieces of paper and cotton that are often worth less than a decimate fraction of the value ascribed to them. 

Society agrees that the different numbers written on each of them represent a certain level of worth than enables the bearer of the notes to buy goods and services.

In ancient times, coins made of actual gold, silver, copper and other precious metals were minted for trade. The value of those coins was as real as the value of the minerals used 

As civilization grew and trade between communities and kingdoms increased, bank notes were introduced and became the norm for trade and with the passage of time different values were ascribed to different currencies depending on the amount of actual gold (and other minerals) each respective country had in reserve.

In the contemporary environment, there are many other pseudo/crypto currencies that have become legal tender but the principle is the same. Their value is a product of collective belief. 

In Zimbabwe, payment platforms and gateways like Zipit, ecocash, one money, innbucks and so on are just lines of code, ones and zeros, that serve as a transferable promise of value. 

The same is true of various international payment platforms that allow for trade among nations and peoples. Society holds in high regard, currencies that have received the best press and PR in its collective cognitive programming. 

Conversely, currencies of countries like Zimbabwe have since the dawn of the millennium been given the short end of the stick by multinational corporations and institutions that are responsible for the global monetary system. 

Banks, Monetary Authorities, nations and even individuals were over the course of decades programmed (through illegal sanctions) to shun and avoid relations with Zimbabwe and ipso facto her currency. 

This had a domino effect on various financial institutions and markets and almost led to the total collapse of the country through hyper inflation estimated to have reached 500 billlion percent at its peak. 

The country’s business environment became intolerable and unpalatable until the adoption of the multi-currency system in 2008. Value for goods and services in the local market since then has mostly been ascribed to US dollars.

Zimbabwe has now introduced the Zimbabwe Gold (ZiG) currency that will be backed by the country’s gold reserves as it was when bank were originally introduced. 

The challenge now is to transform the identity of locally produced currencies in the collective psyche of not only the Zimbabwean people but also the whole world.

Besides the restrictive measures, declared and  undeclared international sanctions and the bad PR that ensued, experts claim that Zimbabwean currencies failed due to  overprinting of money, quasi-fiscal activities, treasury borrowing money from the Reserve Bank etc. 

Therefore, the idea with the ZiG is to have a currency that is only as strong as the coffers of the reserve bank. The value will rise or fall depending on the increase or decrease of Zimbabwe’s national mineral reserves.

If the plan is followed to the later then new Reserve bank Governor John Mushayavanhu’s bold declaration that this new currency would not fail like the rest will be proven right.

“Not under my watch!” he declared.

Due to past experience, many Zimbabweans are still understandably pessimistic about the new currency and would no doubt initially prefer to use United States dollars and other currencies that are still legal tender. 

Pundits and prophets of doom have already begun divining the tragic ends of the ZiG. Some have even suggested that the ZiG will match the rtgs’ performance against the dollar in no time. 

However, as with the precepts of constructivist logic, the ZiG will sooner than later be embraced and collectively accepted as the representation of Zimbabwe’s vast mineral wealth and, under the watchful eye of Mr. Mushayavanhu, resist the torrential tides of inflation that have haunted other Zimbabwean currencies. 

So just like the bearer cheques, agro Chequers and the many other forms of legal tender Zimbabwe has had, the rtgs will be remembered with nostalgic fondness for others and dismay for some. 

Carter Chapwanya
Carter Chapwanya
Carter Chapwanya is a published author and currently a Political Science PhD candidate at Shandong University.