RBZ finalizes P2P platform for gold-backed CBDC

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.