The Central Bank of Zimbabwe has announced the launch of a new digital token that is backed by gold and will be recognized as legal tender. The launch took place on Monday and marks a significant development for the country’s financial sector.
The Central Bank of Zimbabwe has confirmed that its new digital tokens, which are backed by the country’s gold reserves, will be considered a form of digital currency.
The tokens will be supported by the gold reserves held by the Central Bank and are expected to provide a more secure and efficient means of conducting financial transactions. According to state-owned media reports, Zimbabwe in April had 350kgs (12,346 ounces) of gold in reserves valued at $22.80m at the current price and intends to build reserves to around $100m.
The move is part of the Central Bank’s ongoing efforts to modernize Zimbabwe’s financial system and make it more accessible to all. The introduction of this digital token is set to revolutionize the way people conduct financial transactions in Zimbabwe and beyond.
“Individuals who possess physical gold coins will have the option to exchange or convert them into gold-backed digital tokens through the banking system, at their own discretion,” the Reserve Bank of Zimbabwe said in a statement.
The proposed gold-backed digital currency can be bought either in Zimbabwean dollars or foreign currency. Zimbabwe currently operates with the Zimbabwean dollar and the US dollar.
The latest move to introduce gold-backed coins is part of a wider plan by the central bank to stabilise the country’s local unit, which has been faltering against the US dollar, by mopping up excess liquidity in the market.
Zimbabwe has been drowning in double and sometimes triple digit Inflation for over a decade.
The measure is aimed at ensuring that citizens are able to conduct transactions without worrying about the volatility of the country’s currency. The new measure is seen as a crucial step in addressing the challenges facing the country’s financial system and protecting the interests of its citizens.
Over the past year, the value of the Zimbabwean dollar has declined significantly, with one US dollar now worth approximately 1,000 Zimbabwean dollars, compared to 150 Zimbabwean dollars a year ago.
The Central Bank of Zimbabwe’s plan is to enable holders of the Zimbabwean dollar to exchange their currency for the newly introduced gold-backed digital currency, providing a safeguard against the instability of the local currency.
The Zimbabwe dollar is currently trading at $1 US for every $2 000 on the black market.
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