An innovative stride towards monetary stability is witnessed as Zimbabwe transfigures a gold-backed digital token into a payment method. The Reserve Bank of Zimbabwe (RBZ) has launched this revolutionary project named Zimbabwe Gold (ZiG). Each ZiG token spawned will be backed by a physical sum of gold stashed in the bank’s reserves, an initiative the central bank debuted in April 2023. The following October, ZiG was formally introduced as a payment method.
The introduction of physical gold tokens last year and the recent launch of ZiG aims to prompt local investors to invest in the nation’s assets rather than the American dollar, a herculean task in an economy grappling with triple-digit inflation. Yet, the RBZ Governor, Dr. John Mangudya believes, “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.”
ZiG tokens can be safely stored in e-gold wallets or e-gold cards and used for both P2P and business transactions. The RBZ reported various price tiers for buying ZiG, based on its gold reserve weight. As of Sept. 28, investors have bought 17.65 kg of ZiG, using both Zimbabwean and American dollars. Since the previous digital token sale rounds, approximately 350 kg of ZiG tokens have been issued.
Faced with currency instability and an upsurge in inflation for over a decade, Zimbabwe accepted the U.S. dollar as its lawful tender in 2009. After a period of hyperinflation, it stripped the local currency of its worth. Zimbabwe reintroduced its domestic currency in 2019 aiming to revive the economy, but this move was met with a fresh wave of currency volatility.
On one hand, the digital token promises to be a solution for the mounting economic crisis. It could create an investment vehicle that could potentially preserve value and boost the local economy. On the other hand, the complexities of the socio-economic structure, along with the rampant volatility and inflation, might restrain the optimal use and adoption of this innovative strategy. For a nation that has struggled for over a decade with currency stability, this move can be seen as a double-edged sword. As the alluring prospect of this digital gold-backed token emerges, so too does the question whether it can reign in the economic instability that has beset Zimbabwe over the years. Only time will tell if this measure indeed is the elixir to Zimbabwe’s long-standing monetary maladies.
Source: Cointelegraph
