Zimbabwe set to introduce Gold Backed Digital Tokens for daily transactions

THE Reserve Bank of Zimbabwe (RBZ) says plans have now reached an advanced stage to introduce the Gold Backed Digital Tokens (GBDT) as a medium of exchange to be by the public in daily transactions.

The tokenized digital coins were introduced in a bid to shore up the national currency and also serve as an alternative investment option for the market as opposed to the conduct of chasing after the US$ on the parallel market which was the norm.

The instruments can be transferred between individuals and businesses as a form of payment and are projected to stabilise the Zimbabwean dollar.

Presenting the Mid-Term Monetary Policy Statement (MPS) Wednesday, RBZ Governor John Mangudya revealed that plans are currently underway to take the instruments to another level by making the GBDTs a medium of transactions.

"The Bank is at an advanced stage in the preparations for the eventual rolling out of GBDT for transactional purposes in Phase II of the project under the code or name ZiG, which stands for Zimbabwe Gold.

"It is envisaged that the transactional phase will see GBDT complementing with the use of the US$ in domestic transactions," he said.

RBZ governor said appropriate awareness campaigns will be conducted in all national provinces and districts of the country to educate the public on the use and benefits of GBDT. The instrument is envisaged to form the basis for the development of the country's central bank digital currency (CBDC) since ZiG in its current form and design exhibits most of the characteristics of a CBDC.

The MPS revealed that the base instrument, Gold Coins continued to be a critical monetary policy instrument, mopping up over ZW$35 billion from a total of 36,059 coins as of 14 July 2023.

The first maturity after the 180 days vesting period was 25 January 2023 and only 769 gold coins (2% of the total sold) have been redeemed so far, bearing testimony that it is indeed considered a store-of-value.

Mangudya said GBDT has also fared so well on the back of increasing market demand in the economy.

"As at 21 July 2023, the Bank had conducted 11 issuances of GBDT, receiving a total of 590 applications to purchase tokens valued at ZW$50.50 billion and US$7,794.87. The Bank, therefore, issued 325,024,524 milligrams equivalent to 325.02 kgs of gold," he added.