Zimbabwe’s central bank has taken a significant step in addressing its economic challenges by launching a digital currency backed by physical gold.
With the country grappling with a faltering national currency and a history of hyperinflation, the introduction of the new digital currency aims to provide Zimbabweans with a secure means of storing and transacting their money.
The digital currency, in the form of “tokens,” will be backed by the Reserve Bank of Zimbabwe’s physical gold reserves.
Starting on May 8, individuals will be able to purchase the tokens through banks and utilize them via “e-gold wallets or e-gold cards” provided by banks. The pricing of the tokens will be tied to international gold prices as determined by the London Bullion Market Association.
Zimbabwe has endured a tumultuous economic past, with hyperinflation reaching a staggering 5 billion per cent in 2008, eradicating the savings of countless citizens.
Following this crisis, the country temporarily abandoned its currency and allowed the use of the US dollar as legal tender. Subsequently, the government reintroduced a local currency and prohibited the use of foreign currencies for local transactions. However, the black market thrived, and the local currency rapidly devalued, leading to the eventual reinstatement of the US dollar.
The Reserve Bank of Zimbabwe aims to restore confidence in the Zimbabwean currency and enable individuals with lower amounts of money to engage in trading through the new digital currency.
In its initial sale, the bank received 135 applications valued at 14 billion Zimbabwe dollars ($12 million) for the purchase of the gold-backed digital tokens. A second auction is scheduled for May 18.
The launch of the digital currency represents a significant milestone for Zimbabwe as it strives to stabilize its economy and provide its citizens with a more reliable financial system backed by physical assets.