In order to stabilize the Zimbabwean currency, the Reserve Bank of Zimbabwe intends to issue a gold-backed digital money as legal tender.
The Reserve Bank of Zimbabwe is planning to launch a gold-backed digital currency that will be legal tender in the country. The measure is part of a government strategy to keep the local currency from depreciating further against the US dollar.
According to The Sunday Mail, the measure will allow tiny quantities of Zimbabwean dollars to be swapped for the digital gold token, allowing more Zimbabweans to hedge against currency instability. The objective, according to Reserve Bank of Zimbabwe Governor John Mangudya, is to leave no one and no place behind.
According to Bloomberg, Zimbabwe’s currency trades at 1,001 ZWL for $1, but is routinely exchanged for 1,750 ZWL on the streets of Harare, the country’s capital. Annual consumer price inflation in the country fell to 87.6% in March, down from 92% in February.
According to Mangudya, the parallel market exchange rate would stabilise once tobacco growers receive their US dollar payments in the coming weeks. According to him, the current exchange rate volatility is triggered by market expectations of higher foreign currency supply owing to the tobacco season.
According to a March Wall Street Journal report, Zimbabwe’s monetary instability and shortage of change has led to shops creating their own money, frequently on handwritten scraps of paper, so that users can pay for future transactions.
For more than a decade, Zimbabwe has struggled with currency fluctuation and inflation. Following a period of hyperinflation, the country adopted the US dollar as its currency in 2009. The Zimbabwean dollar was revived in 2019 to help the country’s faltering economy. Last year, the government decided to reintroduce the US dollar in an effort to cool the country’s soaring inflation.
As a result of economic issues, numerous African countries have increased their acceptance of cryptocurrencies. According to Chainalysis, the Middle East and North Africa are the fastest-growing regions for crypto adoption due to cross-border remittances, with over $566 billion in crypto transactions between July 2021 and June 2022, representing a 48% increase over the previous year.