RBZ to issue gold-backed digital tokens on May 8
BUSINESS REPORTER
The Reserve Bank of Zimbabwe (RBZ) will issue gold-backed digital tokens with effect from May 8 as it expands the available value preserving instruments.
The gold-backed digital tokens will also enhance the divisibility of the investment instruments and widen their access and usage by the public, RBZ governor John Mangudya (pictured) said on Friday.
He said the first phase of the programme will see the issuance of gold-backed digital tokens for investment purposes with a vesting period of 180 days and redeemable in the same way as the existing gold coins.
He said the tokens would be available for sale through banks in Zimbabwe dollar and foreign currency. Holders of gold coins can exchange or convert to gold-backed digital tokens.
Mangudya said in the second phase the gold-backed digital tokens held in either e-gold wallets or e-gold cards will be tradable and capable of facilitating person to person and person to business transactions and settlements.
“It therefore means that the gold-backed digital tokens would be used both as a means of payment and a store of value,” he said, adding that they will be fully backed by physical gold held by the bank.
The issuance of the gold-backed digital tokens comes after the International Monetary Fund (IMF) said it would discuss with authorities on the new instrument.
It also comes barely a year after the RBZ introduced gold coins to mop excess local currency balance blamed for fuelling the parallel market leading to the rout of the local currency against the greenback.
As at March 10, 2023, a cumulative total of 31,866 gold coins had been sold in different denominations, mopping up more than ZWL$25.8bn, according to the bank’s Monetary Policy Committee.
The IMF has in the past recommended that Zimbabwe introduce interest-bearing assets to mop excess liquidity and wind down the use of gold coins to “sustainably anchor economic growth”.
It maintained the same stance this week with a spokesperson telling Business Times that: “As per the Funds’ Press Release “IMF Staff Concludes Article IV Consultation Mission to Zimbabwe” of December 15, 2022, Fund staff recommendation on monetary policy relates to “restoring the effectiveness of monetary policy, including through the use of appropriate interest-bearing instruments to mop up liquidity and winding down the use of gold coins.”
