Zimbabwe’s Unprecedented Sale of Gold-Backed Crypto Tokens
Despite warnings from the International Monetary Fund (IMF), the Reserve Bank of Zimbabwe (RBZ) sold 14 billion Zimbabwean dollars’ worth of gold-backed digital tokens. This figure translates to approximately $39 million, marking a significant milestone for the African nation’s central bank.
A Slew of Applications Received
The RBZ announced on May 12 that it had received a total of 135 applications. These applications amounted to 14.07 billion Zimbabwean dollars in requests to purchase the gold-backed cryptocurrency.
Gold-Backed Crypto Tokens: The New Stabilizer
The crypto tokens, introduced in April, are backed by 139.57 kilograms of gold. The sale ran from May 8 to May 12, with the tokens being sold at a minimum price of $10 for individuals and $5,000 for corporations and other entities.
The aim of this move is to mitigate the continued depreciation of the local currency against the US dollar and stabilize Zimbabwe’s economy.
Upcoming Second Round of Digital Token Sales
The central bank is planning a second round of digital token sales, with applications requested for settlement by May 18. RBZ Governor, Dr. John Mangudya, affirmed that the issuance of the gold-backed digital tokens aims to “expand the value-preserving instruments available in the economy.”
IMF’s Caution to Zimbabwe
However, the International Monetary Fund has expressed reservations about Zimbabwe’s plan for the gold-backed currency. It recommended that Zimbabwe should instead liberalize its foreign-exchange market to stabilize its economy.
Zimbabwe’s Struggle with Currency Volatility
Zimbabwe has grappled with currency instability and inflation for over a decade. In 2009, it adopted the USD as its currency following an episode of hyperinflation that rendered the local currency worthless. The Zimbabwe dollar was reintroduced in 2019 in an attempt to revive the local economy, but volatility persisted. Now, with the new gold-backed digital tokens, Zimbabwe is hoping to turn the tide on economic instability.