Central Bank of Zimbabwe Governor John Mangudia recently revealed that his institution plans to introduce a gold-backed digital currency. According to the governor, the soon-to-be-launched gold-backed digital currency is expected to help reduce local residents’ demand for US dollars.
Tame the high demand for US dollars
The Central Bank of Zimbabwe said it will introduce a gold-backed digital currency that will be used as an alternative medium of exchange and store of value. according to a report Per the Sunday Mail, this gold-backed version of Zimbabwe’s currency will complement physical gold coins introduced by the Reserve Bank of Zimbabwe (RBZ) in 2022.
As reported by Bitcoin.com News in early July 2022, gold coins were part of RBZ’s multi-pronged strategy that sought to halt the depreciation of the local currency. A few months after their introduction, Central Bank of Zimbabwe Governor John Mangodia said that gold coins had proven to be “an effective tool in the open market to eliminate excess liquidity in the economy.”
In addition to being an effective tool for the RBZ, the physical gold coins were intended to help reduce the local population’s demand for dollars which they see as an alternative store of value. However, despite RBZ’a injecting more than 25,000 gold coins into the financial system so far, the domestic demand for US dollars has not dissipated. This, according to Mangudia, has prompted RBZ to look for another way to tackle the problem.
“We will soon be introducing digital gold tokens to ensure that those with low amounts of local currency are able to purchase gold units so that we leave no one and nowhere behind,” the governor reportedly said.
However, the RBZ wallet did not provide details of when the gold-backed digital currency will start trading.
Meanwhile, the Sunday Mail report also quoted Mangudia as his reasons for the depreciation of the local currency in the parallel market. He said that “expectations of increased foreign exchange supply” versus decreased supply seen in the first three weeks of April may partly explain why the currency has weakened. consumed From 1,200 PLN per dollar seen in March to the current rate of about 1,800 zlotys per dollar.
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