RBZ finalizes P2P platform for gold-backed CBDC

The move is aimed at reducing the demand for US dollars and providing an alternative currency and store of value.

RBZ finalizes P2P platform for gold-backed CBDC
Design by Ifeoluwa Awowoye for Mariblock. 

The Reserve Bank of Zimbabwe is working on making its newly released gold-backed central bank digital currency (CBDC) available as a means of payment for everyday transaction. 

The details 

  • According to reports, the bank plans to go live with the feature in two weeks. 
  • The bank’s governor, John Mangudya told Sunday Mail that the bank is working on cutting down the demand for foreign currency and stabilize the Zimbabwean dollar. 
  • To use the gold tokens for transactions, individuals are required to open specific gold accounts with their local banks. The accounts are then linked to e-gold wallets or e-gold cards, which hold the gold tokens converted to their United States dollar value. 
  • The value of the gold tokens is tied to the market value of gold. Essentially, the price is determined by daily gold prices in the London Bullion Market Association. 
  • Mangudya further stated that the tokens would be measured and sold in milligrams, with each priced at 6 cents.  
  • The report claimed that the RBZ has sold 313,9 kilograms of gold tokens already. 

Key quote 

  • Mangudya told Sunday Mail: 
“The second phase of the roll-out of the digital tokens which will enable transacting using the digital gold-backed tokens will start this month and we are currently testing the system before the launch.” 

Catch up 

  • Zimbabwe’s economy is one of the most dollarized in the world. Per a Mariblock report, 76% of government expenditure is settled in USD. 
  • The country’s native currency, the Zimbabwean dollar has also lost a huge chunk of its characteristic store of value and public confidence in the currency has been mostly eroded. 
  • As a result, the RBZ launched gold-backed digital tokens initially for investment purposes, to serve as a store of value and hedge against inflation in the country. 
  • The International Monetary Foundation (IMF) cautioned the country against adopting a CBDC instead of using more conventional means to curb its dollarized and inflated economy. 
  • In a more conventional move, the country has begun to sell foreign currency on the interbank market through commercial banks to ensure a single and primary source of foreign currency in the country.  
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