De-dollarization: Zimbabwe Central bank to launch gold-backed digital currency for transactions & settlement

Zimbabwe has become the latest country to dump dollar and has decided to issue gold-backed digital currency for “investment purposes with a vesting period of 180 days.” The country’s central bank has revealed that these tokens “would be used both as a means of payment and a store of value.”

The Reserve Bank of Zimbabwe (RBZ) said it will launch gold-backed digital currency on 8 May. Through this, the country’s bank aims to provide a stable means of payment and a store of values for its citizens.

The initiative aims at shoring up Zimbabwe’s faltering national currency- Zimbabwe dollar.

Zimbabwe’s de-dollarization strategy

The implementation of gold-backed digital token will take place in two phases:

1 – focus on investment purposes

2 – facilitating transactions and settlements

How will it work?

Through the launch of these gold-backed tokens, the Zimbabwe’s central bank aims to restrict the local demand for the greenback.

The move also aims at expanding the value-preserving instruments that are available in the economy of Zimbabwe and also enhance the divisibility of investment instruments as well as broaden public access and usage.

In the first phase of implementation gold-backed digital tokens would be issued for investment purposes with a vesting period of 180 days. They will be redeemable in the same way as the existing physical gold coins.

These gold-digital tokens will be available for sale through banks in both local or foreign currency.

Banks in Zimbabwe will be required to have dedicated accounts or e-wallets for holding the gold-backed digital token.

Also, there will be a provision to exchange or convert physical gold coins into gold-backed digital tokens through the banking system.

Zimbabwe gold-backed digital token’s second phase

After the second phase of the launch, gold-backed digital tokens held in e-gold wallets or e-gold cards will become easily tradable and it would facilitate Person-to-Person (P2P) and Person-to-Business (P2B) transactions and settlements.

Following this, the gold-backed digital tokens will serve as both a means of payment and a store of value.

The Zimbabwe’s gold-backed digital tokens may also help attract foreign investors and promote economic growth.

With inputs from agencies

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