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, will be introduced in two phases, central bank governor John Mangudya, said in an emailed statement 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,” Mangudya said.
This year, Zimbabwe’s local currency has declined 35% against the US dollar, which superseded it as the preferred currency for transactions.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’s banking on the stash to help it with the latest plan.
Persistence Gwanyanya, a member of the central bank’s monetary policy committee, said Monday that the authority needs about $100 million 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 try help support the local unit. Nigeria in 2021 became the first country in Africa to introduce a digital currency.