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Does the gold standard end Zimbabwe’s financial crises?

June 2, 2011 – In April 2009 Zimbabwe lost its own currency. After the worst inflation we know from global economic history the government of Zimbabwe suspended the Zimbabwe dollar and allowed the circulation of currencies like the euro, the US-dollar and the South African rand.

100 trillion dollars printed in 2008, put in circulation in January 2009. Source: Wikipedia.

100 trillion dollars printed in 2008, put in circulation in January 2009. Source: Wikipedia.

But now the president of the Central Bank of Zimbabwe, Dr Gideon Gono, has lost confidence in the US dollar. He is afraid that the American budget deficit will affect negatively other nations, whose monetary system is based on the US dollar.
And Zimbabwe disposes of gold deposits. These could be used to issue a gold backed currency in order to regain the trust of the public at large. He wants Zimbabwe to play a vital role: „We need to re-think our gold-mining strategy, our gold-liberalisation and marketing strategies as a country. The world needs to and will most certainly move to a gold standard and Zimbabwe must lead the way.“

If Zimbabwe reintroduced the gold standard, it would be the first nation to do so, after US president Nixon recalled the duty of the government to cash dollar bills in gold in 1971. Nevertheless, economic experts do not believe that Zimbabwe will be able to issue a gold backed currency.

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