In a groundbreaking move, the Reserve Bank of Zimbabwe has successfully sold millions of gold-backed digital tokens, worth approximately $39 million, despite warnings from the International Monetary Fund (IMF).
The Central Bank of Zimbabwe announced on May 12 that it received a staggering 135 applications, totaling 14.07 billion Zimbabwean dollars, for the purchase of the gold-backed cryptocurrency. The value of the tokens sold is equivalent to around $38.9 million, considering the official exchange rate of 362 Zimbabwean dollars to one US dollar.
These digital tokens, introduced in April, are backed by 139.57 kilograms of gold. The sale took place over a period of five days, from May 8 to May 12.
Individuals were able to purchase the tokens for a minimum price of $10, while corporations and other entities had a minimum investment requirement of $5,000. The tokens have a minimum vesting period of 180 days and can be stored in e-gold wallets or on e-gold cards.
This initiative aims to stabilize Zimbabwe’s economy and counter the continued devaluation of the local currency against the US dollar. Despite the caution from the IMF, which recommended the liberalization of Zimbabwe’s foreign-exchange market instead, the Reserve Bank of Zimbabwe believes that issuing gold-backed digital tokens will expand the range of value-preserving instruments available in the economy. Additionally, it aims to enhance the divisibility, accessibility, and usability of investment instruments for the public.
Zimbabwe has been grappling with currency volatility and inflation for over a decade. Following a period of hyperinflation that rendered the local currency worthless, the country adopted the US dollar as its currency in 2009. However, in 2019, the Zimbabwe dollar was reintroduced in an attempt to revive the local economy, which unfortunately led to renewed volatility.
The success of the gold-backed digital currency sale has prompted the Reserve Bank of Zimbabwe to announce a second round of token sales. The bank has requested applications to be submitted by this week, with settlement scheduled for May 18.
This development marks a significant milestone in the global adoption of digital currencies and highlights Zimbabwe’s efforts to address economic challenges through innovative financial solutions. While the IMF remains cautious, the Reserve Bank of Zimbabwe is determined to diversify its economic instruments and provide broader access to secure investments for the public.
Written By Agbo Obinnaya
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