HRF’s Weekly Financial Freedom Report #19

Zimbabwe | New “Gold-Backed” Currency

The government of Zimbabwe replaced its failing Zimbabwean dollar (Z$) with a new currency,  Zimbabwe Gold (ZiG), apparently backed by a mix of foreign currency reserves and precious metals. Observers doubt whether there are enough reserves to support the new currency. Zimbabweans have less than a month (until April 26) to convert old notes and coins to the new ZiG currency. Central bank governor John Mushayavanhu acknowledged that excessive money printing contributed to the collapse of the Zimbabwean dollar and the recent 55.3% inflation rate. In addition to high inflation, Zimbabweans have also had to contend with five currency changes in the past decade. Millions lost their trust in the banking system and sought US dollars. When authoritarian regimes debase currencies and repeatedly introduce new ones, they create a perpetual state of financial disaster for citizens from which it is nearly impossible to recover, leaving citizens with no other options than to seek alternative stores of value.

Yemen | A Currency Conflict

Yemenis, no strangers to financial isolation, face new challenges in accessing money transfers from abroad. Remittances — which amount to $3.77 billion annually for a population of 34 million — are a vital financial lifeline for Yemenis. Now, to try and comply with international financial controls, some money transfer services and exchanges have ceased operating in the country. Compounding this issue is the monetary divide within the country. One economic zone is controlled by the Yemeni government in Aden and another by rebel-Houthi militia in Sanaa. While Aden’s rial in the south has been depreciating, the Houthi-controlled rial in the north has appreciated, leading to simultaneous inflation and deflation in Yemen. Half of Yemen’s population suffers from food insecurity, and 80% suffer from poverty.

Belarus | Journalist Jailed on “Extremism” Charges

Belarusian journalist Ihar Karnei has been labeled an “extremist” and imprisoned by authoritarian President Alexander Lukashenko. Officials accused Karnei of publishing “materials insulting the head of state and representatives of the government.” In response, the country’s leading human rights group argued that imprisonment is “part of a deliberate policy by the authorities to limit the dissemination of uncensored information in the country and an attack on freedom of expression.” Karnei — who is a writer for Radio Free Europe/Radio Liberty and a member of the Belarusian Association of Journalists (BAJ), the country’s top independent journalist group that advocates freedom of speech — is yet another case of Lukashenko’s large-scale suppression of dissent. Journalists like Karnei provide citizens with the information they need to make informed decisions about financial policies that impact their lives while also holding political leaders accountable. By imprisoning them, Lukashenko is keeping citizens in the dark about his financial and economic moves, such as the confiscation of dissident bank accounts and efforts to build a central bank digital currency.

Indonesia | Bank Customer Savings Vanish

Recent cyberattacks targeting Bank Rakyat Indonesia (RBI) have been blamed for vanishing customer savings. One such victim is Nih Lu Putu Rustini, a Balinese woman who was discovered her account was emptied while attempting to withdraw cash from an ATM. Her savings of 37 million Indonesian rupiahs ($2,340) had all vanished. “BRI Bank is notorious for cyberattacks. I have heard of many passing cases where their customers lost everything, and we need to do something about it,” Ni Luh Arie Ratna Sukasari, a partner with Malekat Hukum, said. Despite the backlash, RBI refused any accountability. These incidents underscore the vulnerability of traditional banks and help explain the rise of Bitcoin in South East Asia, where adoption was on display a few months ago at the Indonesia Bitcoin Conference.

China | Guide to the Digital Yuan

A recent article by author and journalist Roger Huang sheds light on the progress of China’s central bank digital currency (CBDC) — the Digital Yuan. According to Huang’s insights, the Digital Yuan has entered its launch phase and is now available in 29 cities nationwide through a mobile app. By establishing a direct link between citizens and the People’s Bank of China, the regime aims to modernize payment methods while also enhancing monetary control and bolstering the international standing of the Chinese Yuan. Despite a concerted push for CBDC adoption by both the central bank and state media, current adoption levels (measured in transaction volume and the amount of currency held in digital wallets) remain low. This suggests possible disinterest among the Chinese population in adopting such a centralized currency, particularly over privacy concerns and fears of further human rights abuses.

Nicaragua | Report on the Silencing of Democracy

The UK parliament released a report titled “The Silencing of Democracy in Nicaragua,” which exposes the suppression of opposition voices under Daniel Ortega’s authoritarian rule. “Our report makes it very clear that anyone critical of the Ortega regime ends up as a target,” British politician David Alton said. Ortega’s government froze the Catholic church bank accounts over accusations of money laundering when they spoke out against the regime’s inhumane practices (Ortega’s regime has broken world records for shutting down bank accounts). The regime also closed down more than 3,800 NGOs and 26 universities, citing law violations and lack of financial transparency. Shutdowns and de-platforming of financial services have forced activists and political oppositions into exile and silenced NGOs. One in five Nicaraguans flee the country out of fear of political persecution.