Zimbabwe has recently introduced a new gold-backed currency called ZiG (Zimbabwe Gold).
About Gold Backed Currency:
- Gold-backed currency is a monetary system where the value of a country’s currency is fixed and directly linked to gold, making it convertible into gold.
- This type of currency has inherent value and potential for long-term stability.
- It prevents inflation because governments and banks cannot manipulate the money supply by overissuing money.
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Frequently Asked Questions (FAQs):
What is ZiG (Zimbabwe Gold)?
ZiG (Zimbabwe Gold) is a new gold-backed currency introduced by Zimbabwe, where the currency’s value is directly linked to gold.
What is a gold-backed currency?
A gold-backed currency is a monetary system where the currency’s value is tied to a specific amount of gold, allowing it to be exchanged for gold.
What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises, leading to a decrease in purchasing power.
How does gold provide long-term stability to a currency?
Gold provides long-term stability because its value remains relatively constant over time, making gold-backed currencies less susceptible to inflation and market fluctuations.