Zimbabwe Reserve Bank Plans Launch of Gold-Backed Digital Token (GBDT) After Positive Investor Response.
The Reserve Bank of Zimbabwe (RBZ) has revealed its well-developed intentions to introduce a Gold-Backed Digital Token (GBDT) aimed at retail usage, following its well-received reception among investors—a success praised by the Bank as “commendable” in a recent report.
Governor John Mangudya of the RBZ, during the presentation of the Mid-Term Monetary Policy Statement (MPS) on August 9, announced that the GBDTs are moving closer to being recognized as a legitimate medium for transactions. Mangudya stated that the GBDT “will soon be expanded for public use in transactions.”
“The Bank is in the final stages of preparation for the eventual rollout of GBDT for transactional purposes in Phase II of the project under the code or name ZiG, representing Zimbabwe Gold,” Mangudya elaborated. “This transactional phase is envisioned to complement the use of the US dollar in domestic transactions.”
The RBZ governor also outlined plans for nationwide awareness campaigns to educate the public about the benefits of GBDT.
The GBDT, closely aligned with characteristics of a central bank digital currency (CBDC), will serve as the foundation for Zimbabwe’s CBDC. However, the Mid-Term Monetary Policy Statement (MPS) report emphasized the enduring importance of Gold Coins as a tool of monetary policy, given their backing of the GBDTs. As of July 14, 2023, these coins had absorbed over ZW$35 billion from 36,059 transactions.
While the first maturity following the 180-day vesting period occurred on January 25, 2023, only 769 gold coins (2% of total sales) have been redeemed, underscoring their role in retaining value.
Gold-Backed Digital Tokens (GBDTs) as Zimbabwe’s Strategy Against Inflation
To complement sales of physical gold coins, enhance investment instrument divisibility, and expand public access, the Bank introduced Gold-Backed Digital Tokens (GBDTs) on May 12, 2023.
According to the Mid-Term Monetary Policy report, by July 21, the Bank had executed 11 GBDT issuances, receiving 590 applications for tokens valued at ZW$50.50 billion (US$7,794.87). Consequently, the Bank issued 325,024,524 milligrams, equivalent to 325.02 kg of gold.
These tokenized digital coins are designed to fortify the national currency, providing an alternate investment avenue beyond the conventional pursuit of US dollars on the parallel market. Serving as a medium of exchange for individuals and businesses, these tokens will play a pivotal role in stabilizing the Zimbabwean dollar and addressing inflationary concerns.
Given Zimbabwe’s successful history in managing inflation, there is confidence in the GBDTs’ implementation. In June, Zimbabwe experienced a significant 175.8% inflation rate due to the adoption of a new bank benchmark and exchange rate depreciation, while the RBZ simultaneously established a 150% interest rate.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.