The Reserve Bank of Zimbabwe (RBZ) has announced that it is in the advanced stages of implementing the Gold Backed Digital Tokens (GBDT) as a new form of currency for everyday transactions. These digital tokens, backed by gold, have been introduced with the dual purpose of strengthening the national currency and providing an alternative investment avenue, aiming to alleviate the common practice of pursuing US dollars on the parallel market.
Designed to facilitate payments between individuals and businesses, these tokenised digital coins are expected to play a key role in stabilising the Zimbabwean dollar. In the recent Mid-Term Monetary Policy Statement (MPS) presentation, RBZ Governor John Mangudya shared that plans are underway to further enhance the utility of GBDTs by incorporating them as a primary medium of exchange in Phase II of the initiative, designated as “ZiG” – Zimbabwe Gold.
The upcoming transactional phase will see GBDTs complementing the use of the US dollar in domestic transactions. Mangudya emphasised that comprehensive awareness campaigns will be rolled out across the nation’s provinces and districts to educate the public about the benefits and usage of GBDTs. These tokens are poised to serve as the foundation for the country’s central bank digital currency (CBDC), as the ZiG project closely aligns with the defining characteristics of a CBDC.
The MPS report highlighted the continued significance of Gold Coins, a critical tool in the RBZ’s monetary policy arsenal. These coins, which require a 180-day vesting period before maturity, have absorbed over ZW$35 billion from a total of 36,059 coins as of July 14, 2023. The minimal redemption rate of 2% (769 gold coins) after the first vesting period attests to their perceived value as a store of wealth.
Mangudya also pointed out that GBDTs have experienced substantial demand in the market, reflecting their positive reception. By July 21, 2023, the RBZ had conducted 11 issuances of GBDTs, receiving a total of 590 purchase applications amounting to ZW$50.50 billion and US$7,794.87. Consequently, the Bank issued 325,024,524 milligrams, equivalent to 325.02 kilograms of gold.