• Zimbabwe is launching a gold-backed digital currency to save its local currency from depreciating further against the US dollar.
• The Reserve Bank of Zimbabwe (RBZ) announced that it was working on a gold-backed digital currency to allow Zimbabweans to trade in tiny sums of their own currency for the digital gold token.
• The governor of the Reserve Bank, John Mangudya, states that this move will help stabilize the country’s parallel market currency rate and also leave no one behind.
Zimbabwe’s Plan To Launch Gold-Backed Digital Currency
The Reserve Bank of Zimbabwe (RBZ) has announced plans to launch a gold-backed digital currency as a way to save their local currency from further depreciation against the US dollar. This move is part of the country’s strategy to hedge against their current economic instability.
Purpose Of Gold-Backed Digital Currency
The purpose of this digital currency is to allow people in Zimbabwean to trade in tiny sums of their own local currencies for a digital gold token. This helps them hedge against any further devaluation or instability in their economy. According to governor John Mangudya, this move will “leave no one and no place behind” and help stabilize their parallel market exchange rate which has been fluctuating due to expectations of increased foreign supply during tobacco season.
Current Situation In Zimbabwe
Currently, the Zimbabwean dollar is trading at 1,001 ZWL per $1 and can be traded at 1,750 ZWL per $1 on the streets of Harare, the capital city. Despite inflation rates being high over the past decade, this new plan with help prevent any further devaluation and provide stability for those living in Zimbabwe.
It remains unclear when this new system will be implemented into effect but most likely within next few weeks once tobacco growers receive payments in US dollars as expected by Governor John Mangudya . While countries like El Salvador have accepted Bitcoin as legal tender and other countries are still working on central bank digital currencies (CBDCs), this plan will provide much needed stability for those living in Zimbabwe who have faced financial hardships for many years now.
In conclusion, implementing a gold-backed cryptocurrency not only helps protect citizens from economic hardship but also provides an opportunity for governments around the world looking into decentralizing their economies while providing much needed liquidity during times of crisis.