Zimbabwe Avoids Devaluation With New Gold-Backed Digital Currency
- The Central Bank of Zimbabwe intends to launch a gold-backed digital currency.
- The adoption of digital gold tokens by the central bank will be the first step towards using the country’s gold reserves to support the value of the Zimbabwe dollar.
- Those possessing modest sums of Zimbabwean dollars are expected to trade their money for the tokens.
According to the state-run Sunday Mail, the Reserve Bank of Zimbabwe (RBZ) intends to establish a digital currency backed by gold that would serve as legal money for domestic transactions.
The central bank’s use of digital gold tokens will be the first step towards using the country’s gold reserves to support the Zimbabwe dollar’s worth.
The report said this would enable people with tiny quantities of Zimbabwe dollars (ZWL) to trade their money for digital tokens to preserve value and hedge against currency fluctuation.
The tokens will assist guarantee that individuals with little funds may purchase gold units so that we leave no one and no location behind, according to central bank governor John Mangudya, who spoke to the Sunday Mail.
Mangudya said that present exchange rate volatility is attributable to market anticipation of higher foreign currency availability when the tobacco auction season begins in March. Those possessing modest sums of ZWL are expected to trade their money for the tokens, according to the central bank.
Zimbabwe abandoned its currency in 2009, replacing it mostly with the US dollar after a period of hyperinflation that left local currency useless.
Apart from the launch of digital money, the Reserve Bank of Zimbabwe is contemplating issuing more Mosi-oa-Tunya gold coins to fight the recent depreciation of the ZWL on the illicit market.
“We shall also soon be introducing digital gold tokens to ensure that those with low amounts of the local currency are able to purchase the gold units so that we leave no one and no place behind,” Mangudya told said.
The Zimbabwe dollar was reinstated in 2019 in an attempt to resuscitate the country’s stagnant economy, but the government decided in June to declare the greenback legal currency once again in order to curb wild price hikes.
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