How is that NOT convertibility from Zimbabwe paper currency?
How is that NOT convertibility from Zimbabwe paper currency?
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Convertibility just means you can buy the coins with Zimbabwe money. It does not mean the Zimbabwe currency has a gold reserve that backs their currency. They do not have that.
It’s not “gold backed” unless the face value of the currency is fixed to a certain weight of gold, and you can always trade it in for that amount of gold, regardless of what gold is trading at.
Just allowing them to buy a one ounce gold coin with the paper currency doesn’t make it gold backed. For example, we are allowed to buy one ounce gold coins with our paper currency - does that make the US$ gold backed? No!
Our silver certificates were “silver backed” because we could exchange a one $ silver certificate for a silver $, which was one ounce. The Federal Reserve notes we have today are nearly worthless by comparison.
How is that NOT convertibility from Zimbabwe paper currency?
It may be convertible but not at a specific rate. If this month its’ Z$1 Million for an ounce of gold, and next month it’s Z$5 Million for an ounce of gold, it didn’t do anything to stabilize the currency.