Zimbabwe to introduce Gold-backed digital currency

According to a report in the state-run Sunday Mail, Zimbabwe’s central bank governor, John Mangudya, has announced the imminent launch of a new gold-backed digital currency aimed at stabilizing the country’s depreciating local unit against the US dollar.

The currency will allow individuals holding small amounts of Zimbabwe dollars to exchange their money for digital tokens to hedge against currency volatility and store value.

The tokens will be accessible to those with low amounts of currency, ensuring that no one is left behind, said Mangudya.

The introduction of the gold-backed digital currency follows last year’s launch of gold coins to stabilize the local unit.

Zimbabwe’s official exchange rate is Z$1 000.4 against the dollar, but it changes hands for Z$1 750 on the streets of the capital.

The central bank governor attributes the current exchange rate volatility to expectations of increased foreign currency supply during the tobacco auction season that started in March.

Despite the country’s attempt to revive its stagnating economy by reintroducing the Zimbabwe dollar in 2019, the government made the US dollar legal tender again in June due to rampant price increases.