The Reserve Bank of Zimbabwe has proceeded with the sale of 14 billion Zimbabwean dollars’ worth of gold-backed digital tokens, equivalent to around $39 million, despite warnings from the International Monetary Fund.
The central bank received 135 applications during the sale period, totaling 14.07 billion Zimbabwean dollars for the purchase of the gold-backed cryptocurrency.
While the official exchange rate is 362 Zimbabwean dollars to one US dollar, the street value is considerably higher. This makes the stash of gold-backed crypto tokens nominally worth around $38.9 million. The crypto tokens, first introduced in April, are backed by 139.57 kilograms of gold.
The sale of these tokens marks Zimbabwe’s continued pursuit of leveraging cryptocurrencies to address economic challenges. However, concerns remain regarding the stability and long-term viability of such initiatives, especially in the face of warnings from global financial institutions like the IMF.
During the sale, the gold-backed crypto tokens were priced at a minimum of $10 for individuals and $5,000 for corporations and other entities. Furthermore, a minimum vesting period of 180 days was imposed for the tokens. Holders of the tokens have the option to store them in e-gold wallets or on e-gold cards, providing flexibility and accessibility for investors.
Zimbabwe has been grappling with significant currency volatility and rampant inflation for more than a decade. In response to the economic turmoil and the collapse of the local currency, the Zimbabwean government adopted the United States dollar (USD) as its official currency in 2009.
This move aimed to stabilize the economy and restore confidence in the monetary system. However, the introduction of the USD was only a temporary measure and did not address the underlying issues plaguing the country’s economy.
In an attempt to regain control over its monetary policy and stimulate economic growth, Zimbabwe reintroduced its own currency, the Zimbabwe dollar, in 2019. Unfortunately, this reintroduction resulted in renewed volatility and inflationary pressures, exacerbating the challenges faced by the Zimbabwean population.
The fluctuating value of the Zimbabwe dollar and the persistent inflationary environment have led many individuals and businesses to seek alternative financial solutions, such as gold-backed digital tokens, to protect their wealth and navigate the turbulent economic landscape.