Zimbabwean Central Bank Will Release Gold-Backed Digital Tokens

By Anthony • August 13, 2023 6:21 am • Comments

The Zimbabwean central bank recently stated they are on the verge of rolling out gold-backed digital tokens for transactional purposes.

According to Zimbabwean authorities, the gold-backed digital tokens have already shown promise they will be “ an effective monetary policy instrument.”

The Reserve Bank of Zimbabwe release a statement saying their new project is “at an advanced stage in preparations for the rolling out of GBDT [gold-backed digital tokens] for transactional purposes.”

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RBZ continued  “in domestic transactions as retailers will be offered a safer, more convenient, and value-preserving medium of exchange.”

This is what News.Bitcoin reported:

The Zimbabwean central bank recently said it is close to rolling out gold-backed digital tokens “for transactional purposes.” According to the bank’s governor, the gold-backed digital tokens have already proven to be an effective monetary policy instrument. Central bank governor John Mangudya also said the results of a consumer survey had shown that residents had limited knowledge about an envisaged central bank digital currency (CBDC).

An ‘Effective Monetary Policy Instrument’
The Reserve Bank of Zimbabwe (RBZ) has said it is now “at an advanced stage in preparations for the rolling out of GBDT [gold-backed digital tokens] for transactional purposes.” The bank said the rollout would see the gold tokens complement the U.S. dollar “in domestic transactions as retailers will be offered a safer, more convenient, and value-preserving medium of exchange.”

In a recently released mid-term monetary policy statement, RBZ governor John Mangudya revealed that the central bank will soon kickstart awareness campaigns whose objective is to “educate the public on the use and benefits of GBDT.” Mangudya also revealed that key stakeholders such as the Confederation of Zimbabwe Industries (CZI) have pledged to configure their systems to allow for the issuance of cards denominated in the GBDT.

As previously reported by Bitcoin.com News, the RBZ launched the gold-backed tokens in May to counter local residents’ demand for U.S. dollars. However, just a few months after the launch, the central bank governor said the GBDTs have already proved to be an effective monetary policy instrument.

Some Zimbabwean economists  are even advocating for government workers to get get paid in gold backed digital coins.

Per Cryptopolitan:

Amidst Zimbabwe’s currency market challenges and a sharp depreciation of the local currency, economist George Nhepera has put forward a unique suggestion to address the situation. Nhepera recommends that the Zimbabwean government consider paying a portion of government workers’ salaries with gold coins. This approach aims to mitigate the dominance of the black market in the country’s currency market while providing stability to workers’ purchasing power.

The approach will help the Zimbabwean economy
Zimbabwe has been grappling with severe economic challenges, including high inflation and a depreciating local currency. The recent plunge of the Zimbabwean currency on the parallel market has triggered substantial price hikes, eroding the value of salaries denominated in the local currency. Some workers have expressed their desire to be paid in U.S. dollars, but the government has cited a scarcity of greenbacks, making dollar payments unsustainable. Consequently, economists like Nhepera are exploring alternative solutions for the Zimbabwean government to consider.

Nhepera suggests utilizing recently launched financial instruments, specifically gold coins, to pay a portion of civil servants’ salaries and benefits. These gold coins were introduced by the Zimbabwean central bank as part of efforts to reduce the demand for U.S. dollars among residents. The gold coins also serve as an alternative retail investment product to preserve value.

The economist argues that promoting the use of these innovative instruments for transactions between individuals, businesses, and government entities would help instill market confidence. With the widespread acceptance of gold coins, Nhepera proposes that the government gradually incorporate them into civil servants’ compensation, allocating approximately 50% of their salaries and benefits to these instruments.

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