Zimbabwe to Launch Gold Backed Digital Currency to Support Weakening Local Currency

Starting from May 8th, Zimbabwe’s central bank plans to launch a gold-backed digital currency to investors. The tokens will be sold in US dollars and local currency, with a minimum token price of $10 for individuals and $5,000 for corporations and other entities. Notably, local currency tokens will be sold at a 20% margin above the willing-buyer willing-seller interbank mid-rate.

Zimbabwe’s local currency has weakened by 37% against the US dollar on the official market this year, and this move aims to support it. The monetary policy committee approved the introduction of the gold coins as a store of value eight months ago. Nigeria was the first country in Africa to introduce digital currency last year.

By introducing a gold-backed digital currency, Zimbabwe aims to attract foreign investors and stabilize the local currency. This move showcases the country’s willingness to adopt technology to support its economy. Although this may not solve the economic challenges the country is facing, it is a step in the right direction.

Many countries are exploring the possibility of issuing their digital currencies as digital currencies gain popularity worldwide. By introducing digital currencies, financial transactions can be streamlined, costs can be reduced, and financial inclusion can be increased. It remains to be seen how Zimbabwe’s gold-backed digital currency will perform in the market and whether it will succeed.