The Launch of Zimbabwe Gold as a Payment Method
On October 5th, the Reserve Bank of Zimbabwe (RBZ) announced the official launch of Zimbabwe Gold (ZiG), a gold-backed digital token that can be used as a payment method. The RBZ had previously introduced the project in April 2023, stating that each digital token would be backed by physical gold held in the bank’s reserves. This initiative aims to encourage local investors to invest in national assets instead of relying on American dollars, especially considering the country’s high inflation rate.
The Purpose of Gold-backed Digital Tokens
The RBZ Governor, Dr. John Mangudya, explained that the issuance of gold-backed digital tokens is meant to expand the range of value-preserving instruments available in the economy and increase accessibility for the public. These tokens can be stored in e-gold wallets or e-gold cards and are tradable for both peer-to-peer and business transactions.
Prices and Sales of ZiG
The RBZ reported different price levels for ZiG based on the weight of its gold reserve. For example, one ounce of ZiG could be purchased for $1,910, while 0.1 ounce could be bought for $191. Investors have already bought around 350 kg of gold worth of ZiG since its previous rounds of sales, using both Zimbabwean and American dollars as payment.
Zimbabwe’s Currency Instability
Zimbabwe has faced currency instability and rising inflation for over a decade. In 2009, the country adopted the U.S. dollar as its official currency due to hyperinflation rendering the local currency practically worthless. However, when Zimbabwe reintroduced its own currency in 2019, it led to renewed volatility in the currency market.
Hot Take: Zimbabwe Gold Offers Stability in an Unstable Economy
The launch of Zimbabwe Gold (ZiG) as a payment method provides a unique opportunity for local investors to preserve their wealth amidst the country’s currency instability and high inflation. By backing the digital tokens with physical gold reserves, the Reserve Bank of Zimbabwe aims to incentivize investors to support national assets rather than relying on American dollars. This innovative approach to digital payments offers greater accessibility and tradability for users, further enhancing the value of ZiG. With its potential for stability and divisibility, ZiG has the potential to revolutionize the financial landscape in Zimbabwe and empower individuals to protect their wealth.
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