The Reserve Bank of Zimbabwe (RBZ) plans to issue gold-backed digital tokens on May 8, in an effort to fight local currency depreciation and curb the demand for the US dollar. However, this move has met with skepticism, and the central bank’s gold-backed digital currency initiative has been accused of being illegal by Zimbabwe’s main opposition party spokesperson, Fadzayi Mahere.
According to the RBZ, the gold-backed digital tokens will serve as value-preserving instruments and enhance divisibility of investment instruments. It intends to widen their accessibility to the public. This is expected to complement the physical gold coins launched in July 2022.
In the first phase of its issuance, the digital tokens will be for investment purposes with a vesting period of 180 days. They can be redeemed in a similar manner as physical gold coins and acquired using local or foreign currency. The RBZ has also indicated that current holders of Mosi-oa-Tunya gold coins will be able to acquire the digital tokens through the local banking system.
The second phase will enable residents to use digital tokens in their e-wallets or cards for settling transactions, suggesting that gold-backed digital tokens will function both as a means of payment and a store of value.
Despite the potential benefits of the gold-backed digital currency, concerns about its legality have been raised. The main conflict in this initiative is the legality of the currency and the opposing opinions about its implementation. If it turns out to be illegal, it could cause significant problems for the country’s economy and financial stability. Moreover, the potential use of digital currency as a speculative investment could exacerbate the country’s economic troubles.
In conclusion, the issuance of gold-backed digital tokens in Zimbabwe offers both pros and cons. On one hand, it could provide a new opportunity for value preservation and diversification of investment instruments, while on the other, it faces potential legal challenges and the risk of exacerbating already existing financial troubles. As the debate around the implementation of this initiative continues, it remains to be seen whether it will prove to be a successful addition to the country’s financial ecosystem.