WASHINGTON - Zimbabwe’s central bank has introduced gold backed digital token, which it says they are designed to expand the value-preservation instruments available in the economy, boost investment instruments and make it easy for the public to access the money market.
The Reserve Bank of Zimbabwe (RBZ) says the digital tokens will be redeemable in the same way as existing gold coins.
The RBZ said the token will be available for sale through banks in local and foreign currency.
The introduction of the tokens comes at a time the Zimbabwe currency is trading at more than 2,200 per USA dollar in the black market and just over 1,000 in the formal money market.
The central bank said banks are expected to create specific accounts for holding the gold-backed digital tokens, which will be commonly known as e-gold wallets or e-gols cards.
According to the RBZ, “holders of physical gold coins, at their discretion, will be able to exchange or convert, through the banking system, the physical gold coins into gold-backed digital tokens.
“The digital tokens held in either e-gold wallets or e-gold cards will be tradable and capable of facilitating Person-to-Person (P2P) and Person-to-Business (P2B) transactions and settlement. It therefore means that the gold-backed digital tokens would be used both as a means of payment and a store of value.”
Independent economists say the gold-backed digital currency is a fallacy as Zimbabweans have tried many ways of enhancing the validity of the local currency to no avail.
Rejoice Nngwenya, chairperson of the Coalition for Market and Liberal Solutions, said, “This is just another way to show that nothing is working for Zimbabwe. The internet does not work in most parts of the country and someone comes up with a digital currency for Zimbabweans. This is crazy stuff. It won’t work like all the things they have been trying in the past.”
The central bank says the pricing of the digital tokens in foreign currency shall remain the same as the pricing model of the physical gold coins as guided by the international gold price as determined by the London Bullion Market Association (LBMA) PM fix.
“Payment for the digital tokens or physical gold coins in local currency shall be at a 20% margin above the willing-buyer-willing-seller interbank mid-rate.”
Applications for the tokens, said the RBZ, will be through banks, building societies and the Post Office Savings Bank. Applications are expected to be for a minimum of US$10 and US$5,000 for individuals and corporates and other entities respectively.
More details to follow …