The Reserve Bank of Zimbabwe (RBZ) is set to introduce a gold-backed digital currency to reduce demand for the U.S. dollar as the local currency continues to tumble, the state-run newspaper Sunday Mail reported Sunday.
The digital gold tokens, a form of electronic money backed by gold held at the RBZ, will allow those holding small amounts of Zimbabwean dollars to exchange their money for tokens in order to hedge against exchange rate volatility.
The Zimbabwean economy has a dual currency structure composed of the Zimbabwean dollar and the U.S. dollar, with the use of the U.S. dollar currently dominant and constituting about 70 percent of domestic transactions, according to the RBZ.
In July 2022, the RBZ introduced the gold coins to halt the collapse of the Zimbabwean dollar and help ease demand for the U.S. dollar.
The RBZ re-introduced the Zimbabwean dollar in 2019, replacing the multiple currency system that had been in use since 2009 when the country abandoned the old local dollar following years of hyperinflation.
In 2020, the government allowed people with free funds to use their foreign currency to pay for goods and services domestically for easier transactions following the outbreak of the COVID-19 pandemic, leading to the current dual currency system. ■