Thursday, November 30, 2023
  • Despite the International Monetary Fund (IMF) warning, the Reserve Bank of Zimbabwe has successfully sold 14 billion Zimbabwean dollars’ worth of gold-backed cryptocurrency.
  • The International Monetary Fund warned the reserve bank against selling gold-backed crypto tokens.
  • The bank, however, went ahead and sold billions of Zimbabwean dollars worth of the gold-backed tokens

Despite the International Monetary Fund (IMF) warning, the Reserve Bank of Zimbabwe has successfully sold 14 billion Zimbabwean dollars’ worth of gold-backed cryptocurrency. This amount is equivalent to approximately $39 million.

The central bank announced on May 12 that it had received 135 applications. This totalled 14.07 billion Zimbabwean dollars to purchase the gold-backed cryptocurrency.

The tokens, which were introduced in April, are supported by 139.57 kilograms of gold. The sale took place from May 8 to May 12. It included a minimum price of $10 for individuals and $5,000 for corporations and other entities. These tokens have a minimum vesting period of 180 days. Moreover, they can be stored in e-gold wallets or on e-gold cards.

This initiative aims to stabilize Zimbabwe’s economy and counter the ongoing depreciation of the local currency against the US dollar.

READ: Zimbabwe announces ambitious Gold backed digital currency

To advance this goal, the authorities will conduct a second round of digital token sales, accepting applications until this week and expecting settlement by May 18.

According to RBZ Governor Dr John Mangudya, issuing gold-backed digital tokens aims to expand the availability of value-preserving instruments, enhance investment instrument divisibility, and promote wider public access and usage.

However, the IMF has expressed concerns about Zimbabwe’s gold-backed currency plan, recommending that the country liberalize its foreign exchange market instead.

Moreover, the IMF spokesperson emphasized the need for conducting a careful assessment to evaluate the benefits in relation to potential risks. This includes macroeconomic and financial stability risks, legal and operational risks, governance risks, and the cost of forgone foreign exchange reserves.

READ: Zimbabwe races to launch CBDC

Zimbabwe has been grappling with currency volatility and inflation for over a decade. In 2009, the country adopted the US dollar as its national currency to combat hyperinflation, which rendered the local currency worthless.

The authorities reintroduced the Zimbabwean dollar in 2019 to revive the local economy, but volatility resurfaced.

The Reserve Bank of Zimbabwe aims to provide alternative value-preserving instruments and address currency instability by issuing gold-backed digital tokens. While the IMF has raised concerns, the bank believes that expanding the usage of these tokens will contribute to economic stability and increase public access to investment opportunities. As Zimbabwe continues its efforts to tackle economic challenges, observers will closely monitor the success and impact of this initiative.

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