Zimbabwe sells $39 million worth of gold-backed digital tokens

Reserve Bank of Zimbabwe sells millions worth of gold-backed crypto tokens despite IMF warning

The Reserve Bank of Zimbabwe has successfully sold around $39 million worth of gold-backed digital tokens, despite a cautionary note from the International Monetary Fund (IMF). The central bank received 135 applications, totaling 14.07 billion Zimbabwean dollars, to purchase the cryptocurrency. The tokens, introduced in April, are backed by 139.57 kilograms of gold and were sold at a minimum price of $10 for individuals and $5,000 for corporations. The minimum vesting period for the tokens is 180 days, and they can be stored in e-gold wallets or on e-gold cards.

The sale of these tokens is part of the government’s efforts to stabilize the economy and counter the continued depreciation of the local currency against the US dollar. The Zimbabwean dollar officially trades at a rate of 362 Zimbabwean dollars to one US dollar, as reported by XE.com, although it is significantly higher on the street. The issuance of the gold-backed digital tokens aims to expand the available value-preserving instruments in the economy and increase their accessibility to the public.

Despite the successful token sale, the IMF has expressed concerns about Zimbabwe’s plan for the gold-backed currency. The organization suggests that Zimbabwe should instead focus on liberalizing its foreign exchange market. The IMF spokesperson emphasized the need for a careful assessment of the measure, considering the potential risks and costs associated with it, including macroeconomic and financial stability, legal and operational risks, governance risks, and the cost of forgone foreign exchange reserves.

Zimbabwe has been grappling with currency volatility and inflation for more than a decade. In 2009, the country adopted the US dollar as its currency to combat hyperinflation that had rendered the local currency worthless. However, in 2019, the Zimbabwean dollar was reintroduced to revive the local economy, which subsequently led to renewed volatility.

Following the successful initial token sale, the Reserve Bank of Zimbabwe has announced a second round of digital token sales. Interested parties are requested to submit their applications by the end of this week, with settlements scheduled to be completed by May 18. The central bank’s governor, Dr. John Mangudya, stated that the issuance of gold-backed digital tokens is intended to enhance the divisibility and accessibility of investment instruments in the economy.

In conclusion, despite the IMF’s cautionary note, Zimbabwe proceeds with its sale of gold-backed digital tokens as part of its economic stabilization efforts. The tokens aim to provide value-preserving options for investors while combating currency depreciation. The country faces ongoing challenges in managing its currency volatility and inflationary pressures. 

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