Zimbabwe central bank to introduce gold-backed cryptocurrency

African country’s authorities hope to stabilize the Zimbabwean dollar by issuing a new digital currency

The Reserve Bank of Zimbabwe (RZB) intends to introduce a digital currency. It will be backed by gold, according to local portal The Sunday Mail. It will be used as legal tender within the country. The authorities hope to stabilize the national currency – the Zimbabwean dollar (ZWL).

The tokens will be a form of electronic money. Which will be backed by the country’s gold, which is stored at the Central Bank. Holders of Zimbabwean dollars will be able to exchange them for tokens backed by gold. The regulator calculates that this will help people save in a highly volatile environment.

The value of Zimbabwe’s national currency is depreciating rapidly and has started to do so quite some time ago. The authorities have held several denominations. And since 2009, Zimbabwe, after a period of record hyperinflation in world history, withdrew its own currency from circulation. Instead of the Zimbabwean dollar began to use U.S. dollars. As well as GBP and the currencies of neighboring countries.

Since 2016, the country issued a quasi-currency – surrogate dollars, officially pegged to the U.S. dollar at a ratio of 1:1. And designed to compensate in the market a shortage of U.S. dollars and other currency circulating in the country. In 2019, the Central Bank of Zimbabwe announced that surrogate currencies would no longer be exchangeable at a 1:1 ratio to the U.S. dollar.

Other African countries

Our experts point out that Zimbabwe is not the first African country to struggle with inflation. And other money circulation problems through the introduction of digital currencies. A year and a half ago, Nigeria introduced the eNaira digital coin. In doing so, it tried to attract about 40 million people to use it. And to get a share of the multi-billion dollar remittance flows and increase the tax base.

One year after eNaira’s launch, only 0.5% of Nigerians have used it. To boost adoption of the coin, the country’s authorities tightened cash withdrawal limits at banks and ATMs at the end of 2022.