RBZ Governor claims that the new digital currency will be "leaving no one and no place behind."
Zimbabwe is taking a bold leap by introducing a gold-backed digital currency, aiming to stabilize its local currency in the face of ongoing depreciation against the US dollar.
Based on the Sunday Mail news report, the Reserve Bank of Zimbabwe's (RBZ) initiative allows citizens to exchange smaller denominations of Zimbabwean dollars for a digital gold token, providing them with a much-needed hedge against currency fluctuations.
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This move is driven by the government's intent to ensure financial inclusion for all, as stated by RBZ Governor John Mangudya, who emphasized the objective of "leaving no one and no place behind."
While the official exchange rate for Zimbabwe's currency stands at 1,001 ZWL to $1, it's often traded at 1,750 ZWL on Harare's streets, the country's capital. The annual consumer price inflation recently dropped to 87.6% in March, a one-year low from February's 92%.
The governor of RBZ expects the parallel market exchange rate to stabilize soon as tobacco farmers receive their US dollar payments in the upcoming weeks. He attributed the current rate volatility to an anticipated increase in foreign currency supply due to the tobacco season.
According to Wall Street Journal report shared in March, Zimbabwe's ongoing monetary challenges have forced businesses to create their "own money," frequently in the form of handwritten paper notes, for future transactions.
The country has struggled with currency instability and inflation for over a decade, leading to several policy shifts. Zimbabwe adopted the US dollar in 2009 after hyperinflation, reintroduced the Zimbabwean dollar in 2019, and then reverted to the US dollar last year to fight against skyrocketing prices.
The growth of crypto adoption in Africa was a response to these economic difficulties. Several reports noted that the Middle East and North Africa had become the fastest-growing regions for crypto adoption, with a 48% increase in transactions totaling over $566 billion between July 2021 and June 2022, primarily driven by cross-border remittances.
Thus, it can be assumed that Zimbabwe's gold-backed digital currency signifies the country's commitment to combat currency volatility and foster financial inclusivity for its citizens.
