The Reserve Bank of Zimbabwe (RBZ) of Zimbabwe has said the gold-backed digital tokens will start operating as a medium of exchange for domestic transactions at the end of next month.
The gold-backed digital tokens are Zimbabwe’s own commodity-backed version of Central Bank digital currency (CBDC).
Business Weekly reported RBZ governor, John Mangudya, as saying the gold-backed digital tokens were an investment product and will also be used for transaction purposes.
They will be in units of milligrammes.
A gramme of gold, which has a current average international spot price of US$63, is equivalent to 1 000 milligrammes.
Mangudya said is the RBZ working with banks and formal retailers, among other stakeholders, in the integration of systems to be used for transacting using the gold-backed digital tokens. He said:
The next stage now is to open bank accounts for those who have already purchased these tokens.
Mangudya said the holders of the digital token will get swipe cards from banks, which they can use to transact with any registered trader like supermarkets. He said:
They are going to complement the existing currency framework whereby, itself not being a (traditional) currency, but you can transact using that gold token and can keep it as a store of value…
We are saying our CBDC, our central bank digital currency, is going to be on the basis of our gold.
In other words, our CBDC is backed by gold. It means we cannot just have more tokens other than the equivalent of gold we are holding in store.
If you look at cryptocurrency products; they are not currencies but an investment. So, this (gold-backed digital token) is an investment.
But (by comparison) cryptocurrencies, in most cases, are not backed by anything.
That is why they are not in the sphere of central banking; they (cryptocurrencies) are not regulated by central banks.
Whereas for our gold, it is we (the central bank) who keep it. So, what we are saying is that we need a cryptocurrency of some nature called CBDC, which is backed by reserves.
The reserves are either gold or foreign currency.
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