Reserved Bank Of Zimbabwe Invites Citizens To Subscribe To Gold-Backed Digital Currency

The Reserve Bank of Zimbabwe urges citizens to subscribe to its new gold-backed digital currency. 

The move is part of the central bank’s efforts to boost the country’s economy, hit hard by hyperinflation and a shortage of foreign currency.

Notably, the digital token is backed by physical gold reserves, estimated to be worth a substantial amount of dollars. The bank noted that the virtual asset will be available to both individuals and financial institutions for specific purposes.

RBZ Gold-Backed Digital Tokens Will Co-Exist With Local Currency

The Reserve Bank of Zimbabwe has emphasized that the gold-backed currency does not replace the country’s existing currency, the Zimbabwean dollar. Rather, it is a complementary digital currency that can co-exist with other forms of money.

According to the bank, the applications for the gold-backed token will be based on charges for individuals and corporate entities. Individuals are to apply with a minimum of $10, while financial institutions and other entities will do the same with a minimum of $5,000. The bank cited that the token issuance will begin on May 8.

According to the notice, the release and usage of the tokens will be in two phases. First, the tokens will be available only for investment purposes and sales across banks. In the second phase, individuals can access them for person-to-business and person-to-person transactions. Also, the citizens can store them in digital cards or wallets.

Typically, this will enable individuals who could not purchase gold worth more than $200 to possess the asset. In other words, the central bank is offering incentives to adopters of the e-gold tokens by providing such a discount, including reduced transaction fees.

Based on the RBZ Governor’s statement, the bank also plans to launch an e-wallet platform for storing and transferring digital currency. Physical gold coin holders can also convert and exchange their holdings for gold-backed digital currency through the banking system.

The launch of e-gold comes amid a broader push by central banks worldwide to explore the potential of digital currencies. China has already launched a digital version of its yuan currency, and Nigeria launched its e-Naira and the Bahamas Sand Dollar. Other countries, including the US and UK, are also considering similar moves. 

Purpose Of The Gold-Backed Digital Tokens

The Reserve Bank of Zimbabwe stated in the notice that the gold-backed currency is a safe and reliable way to transact. They will also help tackle the cash shortage issue in recent years.

According to the RBZ, the e-gold currency aim to address some of the challenges facing Zimbabwe’s financial sector. These include hyperinflation, a shortage of foreign currency, and a lack of access to digital payment platforms. 

By leveraging the country’s gold reserves, the RBZ hopes to provide a stable and reliable digital currency that can be used for online transactions, including payments for goods and services.

The notice also highlighted that the gold-backed digital tokens would be instrumental in expanding value-preserving instruments in the economy. It will also widen the token adoption and enhance the investment instruments’ divisibility.

The issuance of the tokens for investment purposes will last for 180 days. The process of redeeming the tokens will follow the same procedure as the physical gold coins. Users of these tokens can expect faster and more secure transaction processes at a reduced cost. The new development will also expose citizens who do not have direct access to traditional banking services to greater financial inclusion.

Generally, the launch of e-gold represents a significant step forward for Zimbabwe’s financial sector. This is particularly true given that the nation has struggled to keep pace with global trends in the financial sector.

 By leveraging its gold reserves, Zimbabwe is positioning itself as a leader in developing digital currencies backed by tangible assets.

This is one of the major reasons the central bank urges the citizen to subscribe to the newly developed gold-backed digital tokens, considering their potential to improve the country’s economy.