The Reserve Bank of Zimbabwe plans to launch a digital currency backed by the country’s gold reserves and used as legal tender.
The move aims to stabilize the Zim dollar, which has been losing value against the U.S. dollar. RBZ hopes people can exchange their Zim dollars for gold-backed tokens to protect their savings from inflation.
According to the Sunday Mail, RBZ has 13 million tonnes of proven gold reserves, which will be held by the central bank and used to back the digital currency.
The tokens will be electronic money that can be transferred using mobile phones or other devices. RBZ announced in August that it planned to create a central bank digital currency (CBDC) as part of its monetary policy reforms.
Why CBDCs?
Zimbabwe is just one of the many countries whose central bank plans to launch digital currencies. Nigeria launched its eNaira in October 2021, while Ghana, Kenya, and South Africa are also exploring CBDCs.
CBDCs offer financial inclusivity, reduced prices, better policy, and innovation, but they also confront cyberattacks, privacy, regulation, and disruption.
CBDCs are not a panacea for economic problems such as low growth, high debt, and corruption. Zimbabwe has a history of hyperinflation and currency crises, which have eroded public trust in the Zim dollar.
The country uses both Zim and U.S. dollars, but many prefer foreign or cryptocurrencies.
RBZ hopes that by introducing a gold-backed digital currency, it can restore confidence in the local currency and reduce dependence on foreign currencies.
Some experts doubt RBZ’s plan for a gold-backed digital currency. They say the Reserve Bank of Zimbabwe lacks enough gold and unstable gold prices.
They also point out that RBZ must ensure that the digital currency is secure, transparent, and accessible to all Zimbabweans.
