Zimbabwe’s mind-boggling newfangled digital currency, supported by sparkling gold, takes to the forefront in attempting to stabilize the bewildering local currency and tumultuous economy.
In a perplexing and bursty turn of events, Zimbabwe’s central bank has launched a digital currency backed by physical gold reserves, with plans to stabilize the country’s currency and economy. The new digital currency will be introduced in the form of “tokens,” providing Zimbabweans with a safe and secure way to store their money and facilitate transactions with ease. The tokens are already in circulation, with banks making them available through e-gold wallets or e-gold cards. The pricing of the tokens will be determined by international gold prices set by the London Bullion Market Association. This move comes as Zimbabwe has struggled with hyperinflation, reaching an inconceivable 5 billion percent in 2008, leading the government to temporarily scrap its currency and rely on the US dollar. Despite the reintroduction of a local currency and a ban on foreign currencies for local transactions, the black market thrived, leading the government to eventually unban the US dollar. With the introduction of this new digital currency, the Reserve Bank of Zimbabwe hopes to restore confidence in Zimbabwean currency and ensure that people with low amounts of money can still trade them. The bank received over 135 applications totaling $12 million to purchase the currency in its first sale, with a second auction planned for May 18. Zimbabwe’s move follows similar measures taken by other countries, but the International Monetary Fund remains skeptical and has urged the government to liberalize its foreign-exchange rate instead.