The Zimbabwe Reserve Bank's announcement comes just one month after the country introduced a 100 billion dollar note that is now not even enough for a loaf of bread.
"We are removing 10 zeros. Ten billion dollars today will as from August 1 be revalued to one zimdollar," Reserve Bank Governor Gideon Gono told a meeting attended by President Robert Mugabe.
"Appropriate measures are being put in place to address the current setbacks being faced on the currency front, as well as on financial and accounting systems," he said.
The Reserve Bank will be issuing a new 500 zimdollar bill, equivalent to 5 trillion zimdollars under the current system.
With the world's highest inflation, at 2.2 million percent, the revaluation is likely to prove only a temporary fix for the national currency problem. The U.S. dollar officially trades for around 45 billion zimdollars, but the black market rate is reportedly far higher.
The country's economic collapse has been widely attributed to the crippling of national agriculture, once the backbone of a thriving economy, that began with Robert Mugabe's land reforms eight years ago, when farmlands were seized from white owners and subsequently left unused.
Mugabe, 84, has led Zimbabwe for 28 years, since the country's independence from Britain in 1980. Earlier this month, the European Union tightened sanctions on the country's leadership over widely criticized presidential elections, marred by violence against the opposition.
