Zimbabwe to introduce gold-backed digital currency
Zimbabwe has announced plans to introduce a gold-backed digital currency to stabilize the local unit from its continued depreciation against the dollar.
The governor of the central bank John Mangudya revealed the plans and said the digital tokens will allow small holders of Zimbabwe dollars to exchange their money for digital tokens to store value and hedge against currency volatility. In return it will ensure that those with low amounts of currency can buy the gold units.
Stabilization of local unit
Last year, Zimbabwe introduced gold coins to mop up excess liquidity and stabilize the local unit. The official exchange rate is Z$1,000.4 against the dollar, while on the streets of the capital, it readily changes hands at Z$1,750.
The current exchange rate volatility is due to expectations of increased foreign currency supply in the market when the tobacco auction season started in March, according to Mangudya. [1] Since the start of the auction season, Zimbabwe has exported 54.9 kilograms of tobacco valued at $307 million, while during the same period last year, it had shipped 57 million kilograms valued at $295.5 million.
Zimbabwe abandoned its currency in 2009, replacing it mainly with the US dollar after an episode of hyperinflation rendered the local money worthless. The Zimbabwe dollar was reintroduced in 2019 to revive the stagnating economy, but the government in June decided to make the greenback legal tender again to try and tame rampant price increases.
