Zimbabwe is stockpiling gold and diamonds to back a new currency for its ruined economy

Zimbabwe's cash-strapped government is piling up reserves of gold and diamonds to introduce a new local currency, according to the country's Vice President Emmerson Mnangagwa.

However, Mnangagwa did not disclose any detail on when the new currency might be implemented by the southern African country. In November last year, Zimbabwe's central bank introduced so-called "bond notes", bank notes that can be traded within the country's border but have no value abroad.

However, just like the Zimbabwean dollar, which the country abandoned in 2009 after it became worthless, the notes are in very short supply. As a result, the government in Harare has decided to stockpile gold and diamonds ahead of introducing a new currency in the future.

"We are building up reserves of gold and diamonds which if they reach a certain level [...] will then allow us to introduce our own currency that will be backed by those minerals," Mnangagwa was quoted as saying by the state-run Zimbabwe Herald.

"I am not at liberty to disclose to you the level that we want those minerals to reach before they can back our own currency."

Mnagnagwa added the bond notes had also been introduced to stop the smuggling of US dollars out of the country.

"We only get foreign currency when we export something or through non-profit organisations that come into our country," he said.

"Forex also comes from bilateral and multilateral financial support or through Foreign Direct Investment and if we do not get this there will be no forex because the US dollar that we are using is a reserve currency."

Mnagnagwa also indicated the Zimbabwean government was becoming concerned by the fact bond notes had been found in neighbouring countries.