Zimbabwe plans to issue gold-backed digital tokens

Zimbabwe’s central bank plans to sell a gold-backed digital currency to the public from May 8 in another attempt to stabilise its tumbling currency and offer an alternative to the US dollar.

The tokens, to be sold through banks in local and foreign currency at a 20% margin above the interbank mid-rate, would be introduced in two phases, Reserve Bank of Zimbabwe governor John Mangudya said on Friday.

The currency will initially be used for investment and then for transactions.

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

This year, Zimbabwe’s local currency has declined 35% against the US dollar, which superseded it as the preferred currency for transactions.

The central bank has been building gold reserves and acquiring other precious minerals since the introduction of a policy in 2022 that compels miners to pay part of their royalties in cash and metal. It is banking on the stash to help it with the latest plan.

Persistence Gwanyanya, a member of the central bank’s monetary policy committee (MPC), said this week that the authority needed about $100m (about R1.8bn) of gold for the project.

The plan for the digital currency was approved by the MPC in March, eight months after Zimbabwe introduced gold coins as a store of value to help support the local unit.

Nigeria in 2021 became the first country in Africa to introduce a digital currency.