Zimbabwe’s central bank has defied warnings from the International Monetary Fund (IMF) and issued digital tokens backed by gold worth $39 million. This decision comes as the country grapples with high inflation and volatile currency fluctuations.
The tokens were launched in April and made available for purchase from May 8 to May 12, 2023. They are backed by 139.57 kg of gold and come with a minimum vesting period of 180 days. Private buyers could acquire a token for a minimum of $10, while businesses and other entities had to purchase tokens for a minimum of $5,000. The tokens can be stored in e-gold wallets or on e-gold cards.
The Zimbabwean central bank announced that it had received 135 requests to purchase the gold-backed cryptocurrency, with a total value of 14.07 billion Zimbabwean dollars ($39 million).
However, the International Monetary Fund (IMF) had expressed concerns about Zimbabwe’s plan to introduce a gold-backed currency and recommended that the country should instead liberalize its foreign exchange market.
An IMF spokesperson told Bloomberg that a comprehensive analysis should be conducted to ensure that the benefits of the measure outweigh the potential risks and costs. Some of these risks include macroeconomic and financial stability factors, legal and operational issues, governance risks, and the impact on foreign exchange reserves.
RBZ Gold-Backed Digital Tokens Issue No. 1/2023 Results pic.twitter.com/5GvfRk4H8p
— Reserve Bank of Zimbabwe (@ReserveBankZIM) May 12, 2023
Dr. John Mangudya, the Governor of the Reserve Bank of Zimbabwe, stated that the issuance of gold-backed digital tokens aims to expand the range of value-preserving instruments in the economy, enhance the divisibility of investment instruments, and make them more accessible and usable for the public.
The issuance of gold-backed digital tokens is seen as a step towards stabilizing the Zimbabwean economy and addressing the persistent challenges of inflation and currency fluctuations that have plagued the country for years.
The Zimbabwean Central Bank has set a deadline for applications for digital tokens to be submitted by the end of the week, with processing expected to be completed by May 18, 2023. Additionally, a second round of digital token sales is planned for the future.
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