Zimbabwe : The RBZ Introduces Gold-Backed Digital Currency

The Reserve Bank of Zimbabwe (RBZ) is set to introduce a gold-backed digital currency to be used as legal tender for transacting in the country as part of interventions to stabilise the local currency.

Introduction of the digital gold tokens, a form of electronic money backed by gold held at the RBZ, will represent the first steps by the central bank towards using the country’s gold reserves to anchor the Zimbabwe dollar.

Monetary authorities envisage the digital gold tokens will allow those holding small amounts of Zimbabwe dollars to exchange their money for tokens in order to store value and hedge against exchange rate volatility.

The digital gold tokens, which are representative of gold held in physical form by the issuing authority, are expected to complement the Mosi-oa-Tunya gold coins by offering an alternative investment avenue to store value and transact.

“What we have noticed is that demand for foreign currency, apart from being driven by the need to import goods and services in Zimbabwe, is also viewed as a store of value,” added Dr Mangudya.

“It means anyone with local currency would want to convert it to foreign currency.

“We are addressing this demand for store of value by increasing the number of gold coins in the market so that we manage that demand.”

“We shall also soon be introducing digital gold tokens to ensure that those with low amounts of local currency are able to purchase the gold units so that we leave no one and no place behind.”

An increasing number of central banks around the world are starting to develop their own digital currencies, in a development meant to boost financial inclusion, slash payment fees and make money smarter.

Russia is presently working with friendly countries, including Iran and China, to create clearing platforms for cross-border settlements in gold-backed digital currencies in an effort to abolish transactions in fiat currencies like the United States dollar and the Euro.

Zimbabwe National Chamber of Commerce (ZNCC) chief executive officer Mr Christopher Mugaga said: “Government should not be worried much about parallel market rates but rather concentrate on putting in place monetary policies that promote currency stability. With the way the world is moving, policies such as gold digital tokens and gold coins are some of the measures that will help with containing excess money in the economy.”