April 19, 2024
Zimbabwe Adopts Gold-Backed Digital Token as Payment Option
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Zimbabwe Adopts Gold-Backed Digital Token as Payment Option

On October 5, Zimbabwe officially launched its gold-backed digital token, known as Zimbabwe Gold (ZiG), as a new payment method, as announced by the Reserve Bank of Zimbabwe (RBZ).

The RBZ initially introduced this project back in April 2023, with a clear commitment to backing each digital token with a physical reserve of gold held in the central bank’s reserves. The RBZ had already begun issuing physical gold tokens in the previous year and had seen their successful adoption.

The primary goal behind the introduction of both the physical gold tokens and the new ZiG digital currency was to encourage local investors to divert their investments away from the US dollar, which has been challenging in a country struggling with triple-digit inflation. RBZ Governor Dr. John Mangudya previously explained:

“The issuance of the gold-backed digital tokens is meant to expand the value-preserving instruments available in the economy enhance divisibility of the investment instruments, and widen their access and usage by the public.”

ZiG digital tokens could be securely stored in e-gold wallets or e-gold cards and were available for trade in both peer-to-peer and business transactions. The RBZ had set different price levels for ZiG based on the weight of the gold reserve it represented. For instance, one could purchase 1 ounce of ZiG for $1,910 or 0.1 ounce for $191. According to the RBZ, on September 28, investors acquired approximately 17.65 kilograms of ZiG, making payments in both Zimbabwean and US dollars. The total amount of ZiG sold since the previous rounds of digital token sales had reached around 350 kilograms of gold.

Zimbabwe had been grappling with currency instability and soaring inflation for over a decade. In response to a period of hyperinflation in 2009, the country adopted the US dollar as its official currency. However, in an attempt to rejuvenate the domestic economy, Zimbabwe reintroduced its own currency in 2019, which unfortunately led to renewed currency volatility.

Image by wirestock on Freepik

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