Zimbabwe's Central Bank starts testing its gold-backed digital currency

By: Mark Jessy

Zimbabwe's Central Bank starts testing its gold-backed digital currency

July 8, 2023 9:22 PM

There have been reports that the Reserve Bank of Zimbabwe has begun "dry run" testing to determine the practicality of introducing a gold-backed digital currency. According to Nelson Mupunga, the central bank's director of economic research, digital currency will serve as a substitute to foreign currency.


According to sources→, the Zimbabwean central bank has begun a "dry run" to test the possibility of creating gold-backed digital money that will be used as a form of payment. The digital currency, which will be acknowledged as legal cash for peer-to-peer transactions, is one of several initiatives taken by the Reserve Bank of Zimbabwe (RBZ) to stabilize the local currency.


The recent disclosure by a Zimbabwean central bank employee comes only a few weeks after the RBZ first revealed→ plans to establish the P2P network. According to reports, the platform's introduction will allow holders of digital gold tokens to trade them. The governor of the Reserve Bank of Zimbabwe, John Mangudya, has previously indicated that the gold-backed coins will assist the country reduce its insatiable demand for foreign currency such as the US dollar.

 

Related: Zimbabwe's leading trade association warns against full dollarization

 

Nelson Mupunga, who oversees economic analysis and policy execution at the RBZ, claims that the digital currency will serve as a substitute for the dollar and other foreign currency.


"We've reached a critical point; right now, testing is taking place. We will soon allow the gold digital coin to be utilized for transactions in the same way that foreign cash can be purchased on the parallel market. At the same time, we can conduct business. So, the token is on its way and will serve the same purpose," stated the RBZ official.


According to the official, the central bank chose to develop the gold-backed digital money after watching local residents' propensity of abandoning the flailing local currency in favor of the greenback. As a result, instead of storing value in the greenback, people in the inflation-hit country will be able to do so with gold-backed digital tokens.