APA-Harare (Zimbabwe) Zimbabwe is set to introduce a gold-backed digital currency as legal tender in a move aimed at hedging against volatility of the local currency, central bank governor John Mangudya told state media on Sunday.
According to Mangudya, the Reserve Bank of Zimbabwe (RBZ) would soon unveil “digital gold tokens”, a form of electronic money backed by gold held at the central bank.
The proposed digital gold tokens would enable more Zimbabweans to hedge against currency volatility by complementing the existing gold coins that were introduced by the RBZ in July 2022 to reduce demand for U.S. dollars in the country.
Zimbabweans largely shun the weak local dollar in favour of U.S. greenbacks, which they see as more acceptable abroad and better at holding their value long term.
Mangudya said the RBZ has 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.”
“We are addressing this demand for store of value by increasing the number of gold coins in the market so that we manage that demand,” the RBZ chief said.
He added: “We shall also soon be introducing digital gold tokens to ensure that those with low amounts of local currency are able to purchase the gold units so that we leave no one and no place behind.”
The proposed introduction of the digital currency comes at a time Zimbabwe’s monetary authorities are battling to contain a thriving parallel foreign currency market where the U.S. dollar is trading at over Z$2,000 compared to just around Z$1,000 on the official market.
Most Zimbabweans with excess local dollars quickly want to exchange them for the more stable U.S. dollar on the parallel market, thereby driving up rates on the unofficial market.
JN/APA