Zimbabwe to create new digital currency backed by gold

Zimbabwe has taken a step ahead in the digital currency sector with plans to create a new gold backed-digital currency.

By Anna B Kiwanuka

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The Reserve Bank of Zimbabwe is set to introduce a gold-backed digital currency to serve as legal tender in the country. The move is a government initiative to stabilize the local currency from continued depreciation against the U.S. dollar.

According to a report from local media outlet, The Sunday Mail, the move will also allow small amounts of Zimbabwean dollars to be exchanged for the digital gold token, enabling more Zimbabweans to hedge against currency volatility. 

Reserve Bank of Zimbabwe Governor John Mangudya said that the plan intends to leave no one and no place behind.

Dr. Mangudya added, “The movements in the parallel market rate are mainly because of the expectations of increased foreign currency supply in the market when the tobacco marketing season opened.”

Mangudya also noted that the current volatility of the exchange rate is due to expectations of increased foreign currency supply in the market.

Zimbabwe’s currency trades at 1,001 ZWL against $1 but is typically exchanged for 1,750 ZWL on the streets of Harare, the country’s capital, according to Bloomberg. The country’s annual consumer price inflation reached a one-year low in March at 87.6%, down from 92% in February.

Zimbabwe has been fighting against currency volatility and inflation for over a decade. In 2009, the country adopted the U.S. dollar as its currency after an episode of hyperinflation. 

In 2019, the Zimbabwean dollar was reintroduced in an effort to revive the country’s struggling economy. Last year, the Government decided to use the U.S. dollar again in a bid to curb surging prices in the country.

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