The Zimbabwean authorities issued a digital currency, providing it with a gold reserve with a total volume of 140 kg. This is despite the warning from the International Monetary Fund that such a policy could lead to depletion of reserves.
The central bank has already received 135 applications for the purchase of gold-backed digital tokens worth 14 billion Zimbabwean dollars ($12 million). The country’s authorities have announced that the second auction will take place on May 18, 2023.
The Zimbabwean dollar lost over 40% of its value against the US dollar in 2023. As the local currency plummets, the demand for the US dollar is growing. African Finance Minister Mthuli Ncube said a significant proportion of domestic transactions are currently conducted in foreign currencies.
The Reserve Bank of Zimbabwe (RBZ) explained plans to launch a gold-backed CBDC with the need to stabilize the national currency. The use of gold reserves, says RBZ manager Rjon Mangudiya, will keep the Zimbabwean dollar falling in price, help fight inflation and reduce demand for US dollars.
The International Monetary Fund called on the Zimbabwean authorities to replace the introduction of a gold-backed digital state coin with the liberalization of currency legislation. The IMF believes that the issue of CBDC will not help to solve macroeconomic problems, such as the volatility of the local currency. IMF specialists are confident that the most appropriate solution would be to remove restrictions on the exchange rate at which banks, authorized dealers and enterprises operate.
