Zimbabwe to Launch Gold-Backed Cryptocurrency
The Reserve Bank of Zimbabwe (RBZ) announced on April 23 that the gold-backed digital asset will be utilized as legal cash in the African
country. The measure is part of an effort to stabilize the country’s economy and prevent the local currency from depreciating further against the US dollar.
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According to local media sources, the plan will allow anyone with tiny amounts of Zimbabwean dollars to trade them for digital tokens. This will assist them in storing value and mitigating currency volatility.
The current exchange rate volatility, according to RBZ Governor Dr. John Mangudya, is caused by “expectations of increased foreign currency supply.”
This is because the tobacco season has begun, and growers are receiving paid in USD.
Distancing From The Dollar
It is not the first time Zimbabwe has turned to gold to deal with currency volatility. Gold coins were introduced last year to help stabilize the local currency. It should sell at roughly $Z1,000 to the dollar, but it frequently trades for as high as $Z1,750 on the streets.
Zimbabwe abandoned its currency in 2009, primarily in favour of the US dollar. This followed a period of high hyperinflation, which rendered local currency useless. The Zimbabwe dollar was reinstated in 2019 to stimulate the local economy, however instability returned. It has not contemplated making Bitcoin legal tender, but has considered creating a CBDC (central bank digital currency).
The technological features of the new digital currency’s blockchain were not disclosed.
When compared to currencies, gold is a rather stable commodity. Gold prices have risen this year as a flight to safe-haven assets has occurred from another approaching banking United States.
Gold’s Performance YTD
Gold prices have risen by 8.25% since the beginning of the year. Furthermore, according to Gold Price, they reached an all-time high of $2,040 USD/oz on April 13. However, the yellow gold has subsequently retreated and is now trading at roughly $1,980/oz.
Bitcoin prices have risen dramatically this year, rising nearly 70% since January 1.