May 16, 2023

Zimbabwe Sells Millions of Gold-backed Digital Tokens

Zimbabwe's Gold-backed Crypto

Zimbabwe’s Gold-backed Crypto

The Zimbabwean Central Bank announced it sold gold-backed digital tokens worth 14 billion Zimbabwean dollars (around $39 million), neglecting warnings by the International Monetary Fund.

Last week, the bank announced it has received 135 applications for the gold-backed cryptocurrency worth a total of 14.07 billion Zimbabwean dollars. One USD equals 362 Zimbabwean dollars, Cointelegraph reported.

In this regard, John Mangudya, the governor of the Zimbabwean central bank, said: “The issuance of the gold-backed digital tokens is meant to expand the value-preserving instruments available in the economy and enhance divisibility of the investment instruments and widen their access and usage by the public.”

According to the bank, the move aims to stabilize the country’s economy amid the ongoing depreciation of the local currency against the dollar.

The gold-backed digital tokens are sold for at least $10 for individuals and $5,000 for corporations and other entities. 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 bank will hold a second round of the tokens’ sale as the applications should be submitted by this week on May 18.

Earlier this month, the IMF urged the Zimbabwean authorities not to adopt the gold-backed digital currency and go for liberalizing its foreign-exchange market instead, Bloomberg reported.

“A careful assessment should be conducted to ensure the benefits from this measure outweigh the costs and potential risks including, for instance, macroeconomic and financial stability risks, legal and operational risks, governance risks, cost of forgone FX reserves,” an IMF spokesperson told Bloomberg.

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