• The Reserve Bank of Zimbabwe (RBZ) has announced plans to launch a gold-backed digital currency.
• The gold-backed digital currency will allow the Zimbamweans to trade tiny sums of Zimbabwean dollars for the digital gold token.
• This move is part of the Zimbabwean government’s strategy to keep the local currency from depreciating further against the US dollar.
Gold-Backed Digital Currency in Zimbabwe
The Reserve Bank of Zimbabwe (RBZ) have recently announced plans to launch a gold-backed digital currency as part of their strategy to keep their local currency from depreciating further against the US dollar. This new asset will allow Zimbamweans to trade small amounts of their local currency for a digital gold token.
What Will Gold-Backed Digital Currency Do?
This new form of money will enable citizens in Zimbabwe to hedge against their local currency instability, while also offering them an alternative investment option that is not affected by inflation or other external factors. It is hoped that this measure will help reduce exchange rate volatility and provide more stability for businesses and individuals in the country.
Objectives Of Gold-Backed Digital Currency
According to governor John Mangudya, the aim behind this project is „to leave no one and no place behind.“ It is believed that once tobacco growers receive their payments in US dollars, it should help reduce exchange rate volatility and stabilize the value of the Zimbabwean dollar in relation to other currencies.
Current Exchange Rate Situation
Currently, 1 US dollar can be exchanged for 1,001 ZWL on official markets; however, on Harare’s streets it can be traded at 1,750 ZWL per $1 which shows how unpredictable the market can be due to expectations surrounding foreign currency supply in anticipation of tobacco season payments.
The launch of a gold-backed digital currency could prove beneficial for Zimbabwe’s economy by providing some stability and reducing exchange rate volatility in times when there are high expectations around foreign currency supply. While it remains uncertain whether this measure alone can solve all economic issues facing Zimbabwe today, it should nonetheless provide some welcome relief for citizens struggling with its current financial situation.