News summary:
- Zimbabwe’s central bank is launching gold-backed digital tokens for sale starting May 8.
- The tokens will be sold at a minimum price of $10 for individuals and $5,000 for corporations.
- This move aims to support the local currency amidst ongoing economic challenges and currency instability.
The central bank of Zimbabwe has set a price for its digital coins that are backed by gold. The country plans to sell its digital currency backed by gold to buyers beginning May 8. Individuals will have to pay at least $10 for a token, while companies and other groups will have to pay at least $5,000.
The Reserve Bank of Zimbabwe said in a statement on May 4 that gold-backed digital currency pieces will be sold in U.S. dollars and the country’s own currency. But the willing-buyer-willing-seller interbank mid-rate will be 20% higher than the local currency price. From May 8, investors who want to take part can do so. The deal will end two days later.
The willing-buyer, willing-seller exchange market mid-rate is the exchange rate at which banks are able to buy and sell currencies to each other. It is called the “middle point” between the buying and selling rates, which are set by things like supply and demand in the market. This rate is used as a standard for many financial transactions. Banks and other financial companies often use it as a reference rate when they quote exchange rates.
The Reserve Bank of Zimbabwe said on April 28 that it wants to make a digital currency backed by gold that can be used as legal currency in the country.
The southern African country is doing more to support its own currency, which has lost 37% of its value against the U.S. dollar on the public market this year, according to Bloomberg. The latest step is the introduction of digital tokens.
The plan was accepted by the Monetary Policy Committee in March. This was eight months after Zimbabwe started using gold coins as a way to store value and help the local economy.
According to a Bloomberg story, the Zimbabwean dollar is quoted at 1,001 to the U.S. dollar, but it is usually traded for 1,750 on the streets of Harare, the country’s capital city.
Zimbabwe has had trouble with its currency and high inflation for more than ten years. The country switched to the U.S. dollar in 2009, after a time of very high inflation. In 2019, the Zimbabwean dollar was brought back to try to help the failing economy. But in 2022, the government went back to controlling rising prices with the U.S. dollar.
In 2021, Nigeria became the first country in Africa to have its own digital currency. This was called the eNaira.