Biti rejects gold standard proposals

The former finance minister, Tendai Biti, has rejected the idea of having a local currency that is backed by gold, a system called gold standard.

Biti
Biti

“It is bad enough to suggest the return of the Zim dollar at this present moment in time but foolish to the point of insanity to suggest in this century a bullion-backed currency,” said Biti in his Facebook post.

The idea of a gold standard was suggested by President Robert Mugabe, as a strategy to turn around the ailing economy. Biti explained that Zimbabwe does not have a sustainable current or capital account position that can support the return of our currency, as we currently have a problem of perennial trade deficits. “In simple terms we are not producing sufficiently to support our own currency yet,” said Biti. “If Zanu wants to have the equivalent of $4 billion in circulation as notes and coins they must find gold worth that same amount before they can print the new Zim dollar. This is foolish. We are not even producing 20 tons of gold per annum. That gold is not even ours. Where would we get money to buy the gold? And why would we want to trap a whole four billion dollars in a vault when we could be using it,” explained Biti.

“We in the MDC have opted to maintain the current status quo of multiple currencies. However, once our position improves clearly the concept of a regional currency, despite whatever problems are being experienced in the European Monetary union, is an option,” he added.

Post published in: Business
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