Zimbabwe Launches Gold-Backed Digital Token to Boost Local Investment and Curb Inflation
Summary:
The Reserve Bank of Zimbabwe (RBZ) has officially introduced a gold-backed digital token named Zimbabwe Gold (ZiG), aimed at incentivizing local investors to invest in domestic assets rather than U.S. dollars. With every ZiG supported by an equal amount of gold in the bank's reserves, this move intends to diversify the economy's value-retaining tools. ZiG tokens are usable for both P2P and commercial transactions, marking a considerable step amid the nation's ongoing struggle with inflation and currency volatility.
The Reserve Bank of Zimbabwe (RBZ) unveiled its gold-backed digital token, known as Zimbabwe Gold (ZiG), on October 5th, marking its official acceptance as a means of transaction. This initiative was first brought to attention by the RBZ in April 2023, making it clear that every digital token would be supported by an equivalent amount of gold from the bank’s reserves. The monetary institution started dispensing physical gold tokens last year, lauding their successful uptake. The main objective of both the physical and new digital tokens is to encourage local investors to invest in national assets rather than the U.S dollar, a difficult task given the country's triple-digit inflation rate. As per RBZ’s Governor, Dr. John Mangudya, the issuance of gold-backed digital tokens aims to diversify the economy's value-retaining tools and increase the divisibility, accessibility, and usage of the investment tools among the public. ZiG tokens can be safely stored in e-gold wallets or e-gold cards and can be used for P2P or commercial transactions. The RBZ has reported different prices for ZiG, based on the weight of the fund's gold reserve, allowing individuals to purchase 1 ounce of ZiG for $1,910 and 0.1 ounce for $191. On September 28th, investors bought around 17.65 kg of ZiG, using both American and Zimbabwean dollars. The total quantity of ZiG sold since the preceding digital token sale rounds approximates to 350 kg of gold. Zimbabwe has been wrestling with unpredictable currency and increasing inflation for the past decade. In response to a hyperinflation phase that made the local currency virtually valueless, the country adopted the U.S dollar as its official currency in 2009. However, in 2019, Zimbabwe reintroduced its own currency in a bid to reboot the domestic economy, only to witness a recurrence of currency instability.
Published At
10/10/2023 9:30:17 AM
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