• Zimbabwe has struggled with currency volatility and inflation for over a decade
• The central bank is therefore issuing a gold-backed cryptocurrency
• IMF advises against this plan
In the face of persistently high inflation and a sharp depreciation of the country’s Zimbabwe dollar (ZWL) against the US dollar, the central bank of the country in southern Africa has decided to introduce a gold-backed digital currency as a recognized medium of exchange. The gold binding of the new digital currency should now ensure the necessary currency stability. The gold tokens represent gold reserves stored by the Reserve Bank of Zimbabwe (RBZ).
Advertising
Trade Bitcoin and other cryptos via CFD (also with leverage)
At Plus500 you can benefit from rising and falling crypto prices – also with leverage. Test the free demo account now!
Plus500: Please note the Hints5 to this advertisement.
New gold-backed cryptocurrency
As the monetary authorities announced on May 12, they received 135 applications to purchase the gold-backed digital tokens with a total value of 14.07 billion Zimbabwean dollars in a first round. These tokens are worth around $39 million and are backed by 139.57 kilograms of gold. The crypto tokens were launched in April and will be available for purchase from May 8-12, 2023. Businesses and other entities could purchase tokens for a minimum price of $5,000, and private individuals could participate from as little as $10. Now they must keep the tokens in their e-gold wallets or on e-gold cards for a lock-up period of 180 days.
In a second round of sales, a further 106 purchase applications were received, as the RBZ announced on May 18. The tokens in question are backed by 71.64 kilograms of gold.
IMF warning
The International Monetary Fund, which is rather skeptical about cryptocurrencies, had previously warned of caution: “A careful assessment should be carried out to ensure that the benefits of this measure outweigh the costs and potential risks, including macroeconomic and financial stability risks, legal and operational Risks, governance risks and costs of lost foreign exchange reserves,” quoted “Bloomberg” an IMF spokesman. Instead, the IMF had advised countering the high volatility of the Zimbabwe dollar by liberalizing the foreign exchange market.
However, despite this warning, the Reserve Bank of Zimbabwe has implemented its plan for a gold-backed cryptocurrency and has been successful. Now she wants to expand the availability of such investment vehicles.
Editorial office finanzen.net
Image sources: Timur Vildanov / Shutterstock.com, Marc Darchinger/Deutsche Bundesbank