Physical version of gold-backed token replaces Zimbabwe dollar

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Zimbabwe turns gold-backed digital token into payment method

October 10, 2023 Coin Telegraph

The Reserve Bank of Zimbabwe first introduced its new project, in which every issued digital token would be backed by a physical amount of gold held in the bank’s reserves, in April 2023.

On Oct. 5, the gold-backed digital token under the name Zimbabwe Gold (ZiG) officially kicked off as a payment method. The launch was announced by the Reserve Bank of Zimbabwe (RBZ).

The first time the RBZ introduced its new project was in April 2023. The central bank specified that every issued digital token would be backed by a physical amount of gold held in the bank’s reserves. The RBZ started issuing physical gold tokens last year, claiming their successful adoption.

The mission behind both physical coins and freshly introduced ZiG is to persuade local investors to put their money into national assets and not American dollars, which is not an easy task in a country with a triple-digit inflation level. As the RBZ Governor, Dr. John Mangudya said earlier:

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

Digital tokens can be stored in either e-gold wallets or e-gold cards and are tradeable both for P2P and business transactions.

The RBZ reported several levels of prices, for which ZiG could be both, depending on the weight of its gold reserve. Thus, one can buy 1 ounce of ZiG for $1,910 and 0.1 ounce for $191. According to the Bank, on Sept. 28, investors bought the equivalent of 17.65 kg in ZiG, paying with both Zimbabwean and American dollars. The total amount of ZiG, sold since the previous rounds of digital token sales, stands at around 350 kg of gold.

Zimbabwe has grappled with currency instability and rising inflation for more than a decade. In 2009, the nation adopted the U.S. dollar as its official currency in response to a period of hyperinflation that had rendered the local currency practically worthless. In an attempt to revitalize the domestic economy, Zimbabwe reintroduced its own currency in 2019. However, this move was followed by a resurgence of currency volatility.

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Zimbabwe central bank close to introducing gold-backed digital tokens into retail

August 14, 2023 Coin Telegraph

Africa

Physical and digital gold tokens have been a big success as investments and an inflation hedge in Zimbabwe, which continues to face triple-digit inflation.

The Reserve Bank of Zimbabwe (RBZ) expects to launch its gold-backed digital token (GBDT) for retail use soon, the RBZ has stated. This follows the token’s success with investors, which the bank described as “commendable” in a recent report.

The RBZ announced the introduction of the GBDT in April and had conducted 11 issuances representing 325 kg. of gold by July 21, according to a mid-term financial report the bank released on Aug. 9. The tokens are backed by physical gold held by the RBZ.

Now the GBDT “shall be scaled up to be used for transactional purposes by the public.” The RBZ said:

“The Bank is at an advanced stage in preparations for the rolling out of GBDTs for transactional purposes in Phase II of the project. […] It is envisaged that the transactional phase will see GBDTs complimenting [sic] the demand for the US dollar in domestic transactions as retailers will be offered a safer, more convenient, and value-preserving medium of exchange.”

The GBDT issuance came after the RBZ began issuing physical gold coins last year. Those were snatched up by investors and only 2% of them have been redeemed, the RBZ said. The GBDT offers the advantages of divisibility and increased security, the bank claimed.

Inflation in Zimbabwe reached 175.8% in June after the bank adopted a new benchmarking index. The RBZ set its interest rate at 150% that month. The U.S. dollar is heavily used in local trade.

*Annual inflation in Zimbabwe. Source RBZ/ZIMSTAT*

The RBZ has been pursuing a central bank digital currency (CBDC) since July 2022 and said it is making steady progress. It conducted a survey that found 71.7% of respondents would be willing to use it. The GBDT would “form the basis for the development” of a CBDC as it “exhibits most of the characteristics of a CBDC.”

Today's #Fintech Digest includes the Reserve Bank of Zimbabwe preparing to roll out its gold-backed digital tokens for transactions, and some fake news about #Ripple working with the Reserve Bank of New Zealand on #CBDC development on the #XRP Ledger. https://t.co/SFR6O90maT pic.twitter.com/aw8IeCkiSj
— John Kiff (@Kiffmeister) August 14, 2023

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Zimbabwe sets price to sell gold-backed digital tokens

May 5, 2023 Coin Telegraph

Coin Telegraph

Zimbabwe's central bank plans to sell gold-backed digital tokens at $10 for individuals and $5,000 for corporates.

Zimbabwe's central bank has set a price for its gold-backed digital tokens. The country is planning to sell its gold-backed digital currency to investors starting May 8. The tokens will be sold at a minimum price of $10 for individuals and $5,000 for corporates and other entities.

According to a statement released by the Reserve Bank of Zimbabwe on May 4, the gold-backed digital currency tokens will be sold in both U.S. dollars and local currency. However, the local currency price will have a 20% margin above the willing-buyer willing-seller interbank mid-rate. Interested investors can participate in the offer from May 8, and it will close two days later.

The willing-buyer willing-seller interbank mid-rate is the exchange rate at which banks are willing to buy and sell currencies to each other. It is considered the "midpoint" between the buying and selling rates, and it's determined based on prevailing market conditions such as supply and demand. This rate is used as a benchmark for many financial transactions and is often used as a reference rate for exchange rates quoted by banks and financial institutions.

The Reserve Bank of Zimbabwe announced its plans to introduce a gold-backed digital currency to serve as legal tender in the country on April 28.

The introduction of digital tokens is the latest move by the southern African nation to support its own local currency, which according to Bloomberg, has weakened 37% against the USD on the official market this year.

The plan was approved by the monetary policy committee in March, eight months after Zimbabwe introduced gold coins as a store of value to try to help support the local unit.

According to a Bloomberg report, Zimbabwe's currency, the ZWL, is quoted at 1,001 against the USD, but it is commonly exchanged at 1,750 on the streets of Harare, the capital city of the country.

Zimbabwe has been battling currency instability and high inflation rates for more than ten years. After a period of hyperinflation, the country adopted the USD in 2009. In an attempt to revive the struggling economy, the Zimbabwean dollar was reintroduced in 2019. However, last year, the government reverted back to using the USD to control rising prices.

It is worth noting that Nigeria introduced its own digital currency in 2021, becoming the first African nation to do so.

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April 23, 2023 Coin Telegraph

Africa

The Reserve Bank of Zimbabwe plans to introduce a gold-backed digital currency as legal tender in a bid to stabilize its local currency.

The Reserve Bank of Zimbabwe is set to introduce a gold-backed digital currency to serve as a legal tender in the country. The move is a government initiative to stabilize the local currency from its depreciation against the United States dollar.

According to a report from local media Sunday Mail, the move will allow small amounts of Zimbabwe dollars to be exchanged to the digital gold token, enabling more Zimbabweans to hedge against the currency volatility. Central bank governor John Mangudya said the plan intends to "leave no one and no place behind."

Zimbabwe's currency trades nearly Z$1,001 against $1 dollar, but is normally exchanged for Z$1,750 on the streets of Harare, the country's capital, according to Bloomberg. Zimbabwe's annual consumer price inflation reached one-year low in March at 87.6%, from 92% in February.

*Zimbabwe inflation rate. Source: Trading Economics l Reserve Bank of Zimbabwe*

According to Mangudya, the exchange rate in the parallel market is expected to stabilize after tobacco farmers receive their United States dollar payments in the coming weeks. The authority said the current exchange rate volatility was caused by "expectations of increased foreign currency supply" on the market due to the tobacco season.

The monetary dysfunction in Zimbabwe led to a lack of small changes in the country, according to a Wall Street Journal report from March. Businesses have started printing their "own money", often on handwritten scraps of paper, so users can pay for future purchases.

Zimbabwe has been fighting against currency volatility and inflation for over a decade. In 2009, the country adopted the US dollar as its currency after an episode of hyperinflation. In 2019, the Zimbabwe dollar was reintroduced in an effort to revive the country's struggling economy. Last year, the government decided to use the US dollar again in a bid to curb surging prices in the country.

Crypto adoption has grown in many African countries as a result of the economic challenges. According to Chainalysis, the Middle East and North Africa region is the fastest growing region for crypto adoption in the world thanks to cross-border remittances, with over $566 billion in crypto transactions between July 2021 and June 2022, up 48% from the previous year.

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