Zimbabwe’s Reserve Bank is aiming to launch a gold-backed digital currency to stabilise the currency and combat the national tender against depreciation.
According to The Sunday Mail, a local media outlet, the digital currency will be set up as legal tender. The national bank will allow small amounts of the Zimbabwean dollar to be traded for the digital “gold currency”. The move allows more citizens to hedge against the depreciation and volatility the national tender has faced. According to the Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya, this will allow more citizens to enjoy financial inclusion and will help stabilise the economy, especially from hyperinflation compared to the US Dollar which is used within Zimbabwe’s economy:
“The movements in the parallel market rate are mainly because of the expectations of increased foreign currency supply in the market when the tobacco marketing season opened… However, the supply of foreign currency over the past three weeks has been lower than expected. That expectation raised the rates because people thought there will be more money in the market.”
A digital currency to use for transactions and investment
The digital gold token will also help complement the Mosi-oa-Tunya, gold coins that are currently offered as an alternative investment avenue for Zimbabweans. The digital currency will be representative of gold that is held physically and will be issued by the relevant authority party.
Dr. Mangudya added that the digital gold-backed token will also allow citizens to trade for foreign currencies more readily:
“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… It means anyone with local currency would want to convert it to foreign currency…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.”