Zimbabwe Needs $100 Million Of Gold To Kick-start Its Digital Currency

Key Points:

• To stabilize the local currency, Zimbabwe needs $100 million in gold to launch its planned gold-based digital currency.
• The central bank will depend on accumulated gold reserves to underpin the decision.
• The Reserve Bank of Zimbabwe is preparing to launch the gold-backed digital currency.

According to Bloomberg, Persistence Gwanyanya, a member of the Central Bank of Zimbabwe’s Monetary Policy Council, said that the country needs $100 million in gold to launch its planned gold-based digital currency in order to stabilize the local currency and create demand.

According to Gwanyanya, the central bank would depend on its gold holdings to support the program and reduce the volatility of the local currency:

“Any amount around or less than $100 million will be able to deal with our challenge in a big way. We expect the central bank to bring a respectable quantity that can stabilize the Zimbabwe dollar and boost demand.”

The monetary policy committee accepted the concept of a gold-backed digital currency last month. Zimbabwe issued gold coins in June of last year as a store of value and to help maintain the local currency.

According to Innocent Matshe, deputy governor of the Reserve Bank of Zimbabwe, the Reserve Bank of Zimbabwe is finalizing a date for the introduction of a gold-backed digital currency.

“It’s a concept which is pretty straightforward, we tokenize the gold, we have the gold. Every time we issue a coin, it is backed by real gold. We are still finalizing the details, but most countries are asking us how we came up with that plan,” he stated over the phone.

Prior to the news on April 23, the Central Bank of Zimbabwe said that the country’s lawful currency would be a gold-backed digital currency. The adoption of digital gold tokens by the central bank will be the first step toward leveraging the country’s gold reserves to underpin the Zimbabwe dollar’s (ZWL) value.

According to the Sunday Mail report, this would allow consumers with small amounts of ZWL to exchange their money for digital tokens in order to maintain value and hedge against currency fluctuations.

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Harold

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