News / National
Zimbabwe gold digital tokens to hit market on Monday
05 May 2023 at 15:22hrs | Views
THE Reserve Bank of Zimbabwe (RBZ)'s will release its gold-backed digital tokens into the market on Monday to serve as both an instrument for store of value and transacting.
The bank has since invited individuals, corporates and other entities to subscribe for the securities, which the central bank indicated can be bought either in local or foreign currency.
Applications for the gold backed digital tokens, the bank said, must be for a minimum of US$10 dollars for individuals and US$5 000 for financial institutions, corporates and other entities.
The application forms will be available from the RBZ, commercial banks, building societies and People's Own Savings Bank (POSB) and shall be submitted through the same institutions.
Features of the gold backed digital tokens include RBZ as issuer, vesting period of 180 days, use as platform to save, ability to invest and transacting in gold, physically held by the central bank.
According to the central bank, the offer for the tokens opens on Monday and closes on Wednesday, May 10, 2023 while payment should be made on Thursday, May 11, 2023.
Special features of the gold backed digital tokens include prescribed asset status, their acceptability as collateral and tradability, bearer instrument and settlement in both local and foreign currency.
"The RBZ digital tokens are being issued to expand the value preserving instruments available in the economy, enhance divisibility of the investment instruments and widen the access and usage by the public.
"The digital tokens will be issued for investment purposes with a vesting period of 180 days and redeemable in the same way as the existing physical gold coins.
"The digital coins will be available for sale through banks, in both foreign and local currency," the RBZ said, adding banks will create dedicated or specific accounts for the holding of the gold backed digital tokens.
Holders of physical gold coins, at their discretion, will be able to exchange or convert, through the banking system, the physical gold coins into gold backed digital tokens.
"The digital tokens held in either e-gold wallets or e-gold cards will be tradable and capable of facilitating Person2Person (P2P) and Person2Business (P2B) transactions and settlement.
"It therefore means that the gold backed digital tokens would be used both as a means of payment and a store of value," the central bank said in a statement released yesterday.
The gold backed digital tokens are issued in terms of Section 7(d) of the Reserve Bank of Zimbabwe Act, which empowers the bank to buy, sell, discount or rediscount bills of exchange and promissory notes drawn or issued for commercial, industrial or agricultural purposes.
Further, the Act empowers the bank to buy, sell, discount or rediscount bills, notes and other obligations issued by itself.
"The issue is also in line with Section 47(3) of the Act that gives the bank the discretion to buy, sell and hold gold and foreign exchange assets for the purpose of maintaining value of the Zimbabwe dollar and for other purposes as it considers necessary or expedient," the bank said.
Pricing of the gold backed digital tokens in foreign currency shall remain the same as the pricing model of the physical gold coins, as informed by the international gold price, as determined by the London Bullion Market Association PM fix.
Payment for the digital tokens or physical gold coins in local currency shall be at a 20 percent percent margin above the willing buyer willing seller interbank rate.
"Investors cannot use borrowings to finance the purchase of tokenized gold tokens. The Financial Intelligence Unit shall take appropriate action in respect of any suspicious source of funding. Financial institutions are required to exercise Know Your Customer principles," the RBZ said.
The RBZ's digital tokens will be issued, the central bank said, in milligrams, which is one thousandth of a gramme, through the custodian banks within the Central Securities Depository payment system.
The digital tokens can be redeemed after the vesting period of 180 days, based on the international gold price, as determined by the London Bullion Market Association, payable either in foreign or local currency, as is the case with physical gold coins. Payments will be done through the nominated custodial banks.
This comes as the domestic unit of exchange has been facing attacks emanating from what the central bank terms ‘unlimited demand' for the greenback by holders of huge sums of the local currency.
By providing a store of value and acting as an alternative investment instrument, the digital tokens will help stop the depreciation of the local currency, which has lately driven renewed price increases (inflation).
RBZ Governor Dr Mangudya is on record saying the digital tokens, judging by existing demand for and success of physical gold coins, experience strong demand and help suck up excess liquidity from the market.
Physical gold coins issued by the bank have been in high demand, with the central bank unable to keep pace. On that basis, the bank believes there will be a scramble for gold-backed digital tokens, as a store of value.
The bank has since invited individuals, corporates and other entities to subscribe for the securities, which the central bank indicated can be bought either in local or foreign currency.
Applications for the gold backed digital tokens, the bank said, must be for a minimum of US$10 dollars for individuals and US$5 000 for financial institutions, corporates and other entities.
The application forms will be available from the RBZ, commercial banks, building societies and People's Own Savings Bank (POSB) and shall be submitted through the same institutions.
Features of the gold backed digital tokens include RBZ as issuer, vesting period of 180 days, use as platform to save, ability to invest and transacting in gold, physically held by the central bank.
According to the central bank, the offer for the tokens opens on Monday and closes on Wednesday, May 10, 2023 while payment should be made on Thursday, May 11, 2023.
Special features of the gold backed digital tokens include prescribed asset status, their acceptability as collateral and tradability, bearer instrument and settlement in both local and foreign currency.
"The RBZ digital tokens are being issued to expand the value preserving instruments available in the economy, enhance divisibility of the investment instruments and widen the access and usage by the public.
"The digital tokens will be issued for investment purposes with a vesting period of 180 days and redeemable in the same way as the existing physical gold coins.
"The digital coins will be available for sale through banks, in both foreign and local currency," the RBZ said, adding banks will create dedicated or specific accounts for the holding of the gold backed digital tokens.
Holders of physical gold coins, at their discretion, will be able to exchange or convert, through the banking system, the physical gold coins into gold backed digital tokens.
"The digital tokens held in either e-gold wallets or e-gold cards will be tradable and capable of facilitating Person2Person (P2P) and Person2Business (P2B) transactions and settlement.
The gold backed digital tokens are issued in terms of Section 7(d) of the Reserve Bank of Zimbabwe Act, which empowers the bank to buy, sell, discount or rediscount bills of exchange and promissory notes drawn or issued for commercial, industrial or agricultural purposes.
Further, the Act empowers the bank to buy, sell, discount or rediscount bills, notes and other obligations issued by itself.
"The issue is also in line with Section 47(3) of the Act that gives the bank the discretion to buy, sell and hold gold and foreign exchange assets for the purpose of maintaining value of the Zimbabwe dollar and for other purposes as it considers necessary or expedient," the bank said.
Pricing of the gold backed digital tokens in foreign currency shall remain the same as the pricing model of the physical gold coins, as informed by the international gold price, as determined by the London Bullion Market Association PM fix.
Payment for the digital tokens or physical gold coins in local currency shall be at a 20 percent percent margin above the willing buyer willing seller interbank rate.
"Investors cannot use borrowings to finance the purchase of tokenized gold tokens. The Financial Intelligence Unit shall take appropriate action in respect of any suspicious source of funding. Financial institutions are required to exercise Know Your Customer principles," the RBZ said.
The RBZ's digital tokens will be issued, the central bank said, in milligrams, which is one thousandth of a gramme, through the custodian banks within the Central Securities Depository payment system.
The digital tokens can be redeemed after the vesting period of 180 days, based on the international gold price, as determined by the London Bullion Market Association, payable either in foreign or local currency, as is the case with physical gold coins. Payments will be done through the nominated custodial banks.
This comes as the domestic unit of exchange has been facing attacks emanating from what the central bank terms ‘unlimited demand' for the greenback by holders of huge sums of the local currency.
By providing a store of value and acting as an alternative investment instrument, the digital tokens will help stop the depreciation of the local currency, which has lately driven renewed price increases (inflation).
RBZ Governor Dr Mangudya is on record saying the digital tokens, judging by existing demand for and success of physical gold coins, experience strong demand and help suck up excess liquidity from the market.
Physical gold coins issued by the bank have been in high demand, with the central bank unable to keep pace. On that basis, the bank believes there will be a scramble for gold-backed digital tokens, as a store of value.
Source - The Herald
