Zimbabwe’s operating governance may start selling its gold-backed digital currency to the people from May 8. This is in an attempt to curb its plunging local currency and offer an alternative in place of the US dollar.
As per the announcement, a gold reserve from the government will aid the virtual currency and another fiat.
Gold Tokens Hedged Against Depreciating Country Currency
Governor John Mangudya disclosed that the digital gold tokens will let those holding small stakes in Zimbabwe’s local currency swap their money for tokens to store value and hedge against currency volatility.
Furthermore, the Zimbabwe government is also assessing releasing more virtual gold coins onto the market to halt the recent sharp depreciation of the Zimbabwe currency on the parallel market, declared Mangudya:
The need to import goods and services in Zimbabwe is the driving force behind the surge in foreign currency demand. Additionally, citizens also view these currencies as a store of value.
Therefore, It means anyone with local currency would desire to convert it to foreign currency, we are addressing this market for a store of value by increasing the number of gold coins in the market so that we manage that demand.
The governor says We will soon be presenting digital gold tokens to connect those with low stakes of local currency who are unable to purchase the gold units so that we leave no one and no place behind.
Zimbabwe Policy To Curb Depreciation
The issuance of gold-backed backed digital tokens is meant to develop the value-preserving appliances available in the economy and boost the divisibility of the asset instruments and widen their access and use by the public, Mangudya said.
This year alone, Zimbabwe’s local currency has plunged 35% against the US dollar, which displaced it as the preferred currency for transactions in the country.
Notably, the central bank has been building gold hoards and obtaining other precious minerals since the introduction of a policy in 2022 that drives miners to pay part of their royalties in cash and metal. It’s banking on the stash to aid it with the latest strategy.
