Zimbabwe’s Central Bank to Introduce Gold-Backed Digital Tokens for Everyday Transactions

The Reserve Bank of Zimbabwe (RBZ) has announced significant progress in its plans to launch Gold-Backed Digital Tokens (GBDT) for public use in daily transactions, as a means to bolster the national currency and offer an alternative investment avenue.

The introduction of these tokenized digital coins aims to provide stability to the Zimbabwean dollar and reduce the dependence on chasing after the US dollar in the parallel market.

These tokens can be exchanged between individuals and businesses as a form of payment, and their implementation is anticipated to contribute to the stabilization of the national currency.

RBZ Governor John Mangudya, while presenting the Mid-Term Monetary Policy Statement (MPS), disclosed that the next phase involves expanding the use of GBDTs as a medium of transactions.

“In Phase II of the project under the code or name ZiG, which stands for Zimbabwe Gold, the Bank is at an advanced stage in the preparations for the eventual rolling out of GBDT for transactional purposes,” Mangudya stated. He further emphasized that GBDTs would work in conjunction with the US dollar for domestic transactions.

Mangudya also shared that comprehensive awareness campaigns will be launched across Zimbabwe’s provinces and districts to educate the public about the use and advantages of GBDT. He noted that the current design of ZiG holds many characteristics of a Central Bank Digital Currency (CBDC) and can lay the foundation for the country’s CBDC development.

The MPS revealed that the base instrument, Gold Coins, remains a crucial monetary policy tool. It has absorbed over ZW$35 billion from a total of 36,059 coins by July 14, 2023. The fact that only 769 gold coins (2% of the total sold) have been redeemed so far after the 180-day vesting period indicates their value as a store of value.

Mangudya highlighted that GBDT’s success is due to increasing market demand. “As of July 21, 2023, the Bank had carried out 11 issuances of GBDT, receiving a total of 590 applications to purchase tokens valued at ZW$50.50 billion and US$7,794.87. Consequently, the Bank issued 325,024,524 milligrams equivalent to 325.02 kgs of gold,” he concluded.