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Zimbabwe to launch gold-backed digital currency

By , Sub Saharan Africa Business, Tech, News and Development Journalist
Zimbabwe , 24 Apr 2023
Zimbabwe is set to introduce gold backed digital currency.
Zimbabwe is set to introduce gold backed digital currency.

Zimbabwe is set to introduce a gold-backed digital currency, the government-owned Sunday Mail reported yesterday.

Reserve Bank of Zimbabwe governor, John Mangudya, is cited in the report, saying the troubled Southern African nation of 16 million will introduce the digital token to fight inflation.

“We shall soon be introducing digital gold tokens to ensure that those with low amounts of local currency are able to purchase the gold units (gold coins),” said Mangudya.

The move by Zimbabwe comes almost a year after it introduced gold coins indexed against the international price of the precious metal.

Now, Zimbabwe, which has been battling run-away inflation, is hoping to stabilise the local unit with the digital currency.

Currency volatility has hobbled Zimbabwe, which is battling incessant foreign currency shortages and elevated inflation currently calculated at 87.6% according to data on the Reserve Bank of Zimbabwe.

Mangudya said the digital currency was, “mainly a store of value as opposed to holding the local currency".

He added: "Backing it up with gold will ensure that it has something valuable attached to it so we are leaving it to the central bank and its fintech unit to sort operationalize and set the parameters.”

The reserve bank governor said Zimbabweans holding local currency are chasing foreign currency as a store of value.

This was stretching the available foreign currency resources.

Kuda Musasiwa, a tech and fintech commentator wrote on Twitter: “Minting non-fungible tokens backed on real gold can actually be a powerful move" for Zimbabwe.

“We are already used to holding digital wallets in Zimbabwe. I know many have been working on this in the sandbox for years.

"I wonder who’s finally cracked it. And how transparent it will be.”

Other fintech industry sources told ITWeb Africa that the concept of a gold-backed digital token had proven successful under a central bank-supervised sandbox in the past few months.

They said the digital token would be “redeemable at a future date,” with its value hedged on the price of gold.

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