Zimbabwe’s central bank has unveiled a gold-backed digital currency aiming to increase the economy’s options in carrying out daily transactions and bolster the Zimbabwean Dollar (ZWL).

Already challenged with pressures to mitigate uncertainties by stocking the US Dollar, the country has suffered the impact of exchange rate instability due to the pursuit of scarce foreign currency within the economy. 

As such, with the objective of easing these pressures, Reserve Bank of Zimbabwe (RBZ) governor John Mangudya revealed the addition of the Zimbabwe Gold Backed Digital Token, known as Zimbabwe Gold (ZiG).

The initiative is in line with the Monetary Policy Committee’s resolutions from the meeting held last month, New Zimbabwe reports. 

“Accordingly, the bank wishes to advise that with immediate effect from October 5 2023, ZiG will become one of the means of payment for domestic transactions, over and above its value preservation purpose. 

“The value of ZiG will be at par with the value of the physical Mosi-oa-Tunya gold coin and will remain informed by international gold price,” the governor stated. 

According to economist Persistence Gwanyanya, ZiG is in response to Zimbabwe’s desire to substitute the Zimbabwean Dollar. 

“This confirms the fact that the ZWL on its own is inadequate to become a preservation instrument. The appetite to preserve value has, therefore, been the major driver of depreciation, prompting members of the public to offload the local currency into the US.

“So going forward, the transacting public can now offload their ZWL into the ZiG, which will play the dual function of being a transactional instrument as well as a value preservation unit which is not shaken by parallel market dynamics but gold price movements on the international market,” he added.