The Reserve Bank of Zimbabwe has introduced the digital currency pegged to gold with the aim of stabilizing its local currency.
Zimbabwe has an all-new legal tender in its country: a gold-backed digital currency. Launched by the Reserve Bank of Zimbabwe, the digital tokens could help stabilize the local currency, which has been erratic for some time now, and continuously depreciated against the dollar.
Residents of Zimbabwe would also get the chance to use the digital currency pegged to gold as a hedge against inflation and currency volatility. They could exchange small amounts of Zimbabwe dollars for digital currency.
At the same time, the Reserve Bank of Zimbabwe is also trying to control the depreciation of the Zimbabwe dollar even further through many initiatives. Dr. John Mangudya, the Governor of the Reserve Bank of Zimbabwe, said the exchange rate could witness a decrease in volatility once tobacco farmers received their payments in US dollars.
He also stated that expectations of more supply of foreign currency in the domestic market at the time of the opening of the tobacco market could have led to heightened volatility. Even though people thought there would be more foreign money in the market, supply has been quite low, which has led to an increase in rates.
He implied how the money was being used to service contractors till now in the tobacco market but would finally start going into the growers’ accounts, leading to stability in the foreign exchange.
The Reserve Bank is also increasing the supply of gold coins in the market to address the demand for a store of value.