Digitizing gold into a transactional medium, Zimbabwe’s Reserve Bank (RBZ) is moving towards a novel endeavor, releasing Gold-Backed Digital Tokens (GBDT) tailored for public use. In an advanced phase of preparation, the RBZ under the stewardship of Governor John Mangudya, is gearing up to rollout GBDT, code-named ZiG for ‘Zimbabwe Gold’.
Echoing the characteristics of CBDC’s (Central Bank Digital Currency), ZiG would see fiat money and digital transactions standing shoulder to shoulder in the domestic market. The GBDT initiative, a nationwide project, aims to mass educate Zimbabweans on the advantages and usage of this digital instrument. The tokens will not only add weight to the national currency but also offer an alternative investment route, thus providing an escape route from the conventional US dollar pursuit.
While these tokens will see light in the domestic markets, the recently issued MPS report underlines the importance of Gold Coins, the backbone of GBDT. Sindh July 2023, over ZW$35 billion have been absorbed by roughly 36,059 gold coins, affirming their monumental value-retention role.
This digital transformation of gold comes as part of the pragmatic strategy to grapple with bloating inflation, which in June, soared to 175.8%. The scale of digital token offerings is impressively large, with the Bank already having issued a total of 590 tokens amounting to ZW$50.50 billion.
Despite these measures showing signs of curbing inflation, with monthly indices dipping to -15.3% in July 2023, a hint of skepticism remains. This is primarily due to the historic volatile economic landscape of Zimbabwe. But with RBZ’s commitment to ease inflation and the government’s actions such as exchange rate liberalization and enforcing local currency payments, digital economy enthusiasts will be eagerly watching the Zimbabwean experiment manifest its full potential.
A successful implementation of GBDT can set an impactful precedent, cementing digital currencies as the future of financing not just in Zimbabwe, but painting a broader stroke across the digital economy landscape.
Source: Cryptonews
