Zimbabwe’s central bank, the Reserve Bank of Zimbabwe (RBZ), is reportedly looking to introduce a gold-backed digital currency to be used as legal tender in the country.
The introduction of the digital gold tokens is part of the government’s interventions to deal with the country’s fluctuating currency and represents the first steps towards using the country’s gold reserves to peg the national currency, the Zimbabwean dollar.
When introduced, the tokens will be exchangeable for small amounts of Zimbabwean dollars. Holders can exchange their money for the tokens in order to store value and shield themselves from exchange rate volatility.
According to Dr. John Mangudya, governor of the RBZ, the current currency volatility is caused by “the expectations of increased foreign currency supply in the market when the tobacco marketing season opened.”
The new digital currency will complement the Mosi-oa-Tunya coins introduced in 2022 and will act as the digital representation of the gold coins. With it, the country hopes to have more citizens buy into its gold industry and fight the redundancy of its currency.
“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 and we are addressing this demand by increasing the number of gold coins in the market,” Mangudya concluded.