Zimbabwe’s Bold Move: Central Bank to Launch Gold-Backed Digital Currency in May!

"Zimbabwe's Reserve Bank to Launch Gold-Backed Digital Tokens for Investment Purposes"

The Reserve Bank of Zimbabwe (RBZ) has announced that it will begin issuing gold-backed digital tokens on May 8th. The tokens will be issued for investment purposes with a vesting period of 180 days. The RBZ has stated that the gold-backed digital tokens would be used both as a means of payment and a store of value. The tokens are intended to expand the value-preserving instruments available in the economy and enhance the divisibility of the investment instruments. The issuance of the digital currency will be split into two phases, with the first phase being for investment purposes and the second phase allowing residents with digital tokens to use them to settle transactions.

The digital currency will be backed by the gold held at the Reserve Bank of Zimbabwe (RBZ), which is expected to complement the physical gold coins that went into circulation in July 2022. The announcement of the digital currency’s issuance date came just a few days after the central bank governor, John Mangudya, revealed the RBZ’s intention to fight local currency depreciation with gold-backed digital currency. Zimbabwe’s central bank hopes to curb the local demand for the greenback with the soon-to-be-launched digital currency.

The RBZ is hoping that the gold-backed tokens will widen their access and usage by the public. Prospective buyers can acquire digital tokens using local or foreign currency. The RBZ has also suggested that current holders of the Mosi-oa-Tunya gold coins will be able to acquire the digital coins using the local banking system.

Under the second phase, residents with digital tokens held in e-wallets or cards will be able to use such funds to settle transactions. The gold-backed digital tokens held in either e-gold wallets or e-gold cards will be tradable and capable of facilitating Person-to-Person (P2P) and Person-to-Business (P2B) transactions and settlements. It, therefore, means that the gold-backed digital tokens would be used both as a means of payment and a store of value.

However, Fadzayi Mahere, the spokesperson of Zimbabwe’s main opposition party, warned in a tweet that the RBZ’s gold-backed digital currency initiative could be illegal. The RBZ has not yet responded to this claim.

The issuance of the gold-backed digital tokens is meant to expand the value-preserving instruments available in the economy. The tokens are also intended to enhance the divisibility of the investment instruments and widen their access and usage by the public. The gold-backed tokens are expected to be redeemed in the same way as physical gold coins are redeemed.

The RBZ has stated that the gold-backed digital tokens would be used both as a means of payment and a store of value. The tokens are expected to complement the physical gold coins that went into circulation in July 2022. The RBZ is hoping that the gold-backed tokens will widen their access and usage by the public.

Prospective buyers can acquire digital tokens using local or foreign currency. The RBZ has also suggested that current holders of the Mosi-oa-Tunya gold coins will be able to acquire the digital coins using the local banking system.

Under the second phase, residents with digital tokens held in e-wallets or cards will be able to use such funds to settle transactions. The gold-backed digital tokens held in either e-gold wallets or e-gold cards will be tradable and capable of facilitating Person-to-Person (P2P) and Person-to-Business (P2B) transactions and settlements. It, therefore, means that the gold-backed digital tokens would be used both as a means of payment and a store of value.

The RBZ’s gold-backed digital currency initiative is expected to curb the local demand for the greenback with the soon-to-be-launched digital currency. The RBZ has not yet responded to the claim that the gold-backed digital currency initiative could be illegal.

Martin Reid

Martin Reid

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