According to a report in the Sunday Mail, Zimbabwe’s central bank governor, John Mangudya, announced that the bank plans to introduce a gold-backed digital currency to help reduce demand for the US dollar. The upcoming digital currency is expected to serve as an alternative medium of exchange and a store of value.
The move is aimed at taming the high demand for US dollars in Zimbabwe as people look for a stable form of currency. The gold-backed digital currency will complement the physical gold coins introduced by the Reserve Bank of Zimbabwe (RBZ) in 2022.
This follows an earlier move by the central bank to ban local banks from trading or processing payments linked to cryptocurrencies like Bitcoin. With the introduction of the gold-backed digital currency, the RBZ hopes to stabilize the Zimbabwean dollar, which has been destabilized by sustained hyperinflation.
While the introduction of digital currency may be seen as a positive step towards stabilizing Zimbabwe’s currency situation, it remains to be seen how effective it will be in practice. The RBZ will need to back the currency with a sizeable amount of gold in order to create demand and build trust among the public. Only time will tell if this latest move will help to alleviate the economic crisis in Zimbabwe.
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