Zimbabwe Resorts to Specie Coins

The Reserve Bank of Zimbabwe (RBZ) is issuing gold coins which are specie rather than fiat money in an attempt to stabilise the Zimbabwean currency, bring inflation under control and reduce reliance on the US dollar.

Fiat money is a government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it. The value of fiat money is derived from the stability of the issuing government, rather than the worth of a commodity backing it. In other words, fiat currencies only have value because the government maintains that value; there is no utility to fiat money in itself.

Specie money, on the other hand, has an intrinsic value as represented by the gold or other precious metal from which it is made. Unlike fiat money, which comprises both paper notes and coins made up of base metals, the value of specie money resides in the value of the metal itself. Specie money – sometime referred to as commodity money – is not used for transactions, except, now, in Zimbabwe.