Zimbabwe will issue gold-backed digital tokens from May
Introduction of a gold-backed digital currency in Zimbabwe is set to take effect from May. Zimbabwe’s central bank confirmed the report and said the move aims to stabilize the local unit from its continued depreciation against the dollar.
The plan for the digital currency was approved by the MPC in March, eight months after Zimbabwe introduced gold coins as a store of value to try help support the local unit. Nigeria in 2021 became the first country in Africa to introduce a digital currency.
Currency volatility
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. Central bank governor John Mangudya explained that the tokens will be sold through banks in local and foreign currency at a 20% margin above the interbank mid-rate, will be introduced in two phases
“The issuance of the gold backed digital tokens is meant to expand the value-preserving instruments available in the economy and enhance the divisibility of the investment instruments and widen their access and usage by the public,” Mangudya said.
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. 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.
