Zimbabwe to introduce gold-backed digital currency
The Reserve Bank of Zimbabwe (RBZ) plans to introduce a gold-backed digital currency as legal tender to help stabilize the local currency, the Zim dollar.
In the Sunday Mail report, it stated that this will allow those holding small amounts of Zimbabwe dollars to exchange their money for digital tokens to store value and hedge against currency volatility.
The tokens will be a form of electronic money backed by the country’s gold reserves, which will be held by the central bank. RBZ wants people holding Zim dollars to be able to exchange their money for the gold-backed token to help them hedge against the volatility of the local currency.
The Zim dollar is known for being volatile. A year ago, 1 U.S. dollar was worth about 150 Zim dollars, now it’s closer to 1,000, according to Investing.com. The country operates with both the Zim dollar and the U.S. dollar.
Ever since Zimbabwe suffered from a major crisis of hyperinflation in 2008. The country abandoned its currency in 2009, replacing it mainly with the US dollar after an episode of hyperinflation rendered the local money worthless. The Zimbabwe dollar was reintroduced in 2019 in a bid to revive the stagnating economy, but the government in June decided to make the greenback legal tender again to try and tame rampant price increases.
To date, since the start of the auction season, Zimbabwe has exported 54.9 million kilograms of tobacco valued at $307 million. During the same period last year, it had shipped 57 million kilograms valued at $295.5 million.
In the past year, annual inflation has rarely dipped below 90 percent and the Zimbabwe dollar has fallen sharply against major currencies.