The Reserve Bank of Zimbabwe (RBZ) has announced that its gold-backed central bank digital currency (CBDC) will be available for transactions by the end of next month. The CBDC is part of the bank’s measures to help curb hyperinflation in the country.
- The CBDC will start operating as a means of domestic transactions by the end of August.
- According to the bank, the delay is due to its plan to launch awareness campaigns to show users how tokens work, test systems interoperability and functionality, and ensure users create the proper accounts before transacting.
- These processes will take up to a month, and afterward, users can approach their respective banks to buy these tokens in local fiat or foreign currencies.
- The gold-backed CBDC’s value will be determined by the international price of the bullion reserves (of gold) held by the central bank’s vault.
What was said:
John Mangudya, RBZ governor said:
"We are saying our CBDC, our central bank digital currency, is going to be on the basis of our gold. In other words, our CBDC is backed by gold. It means we cannot just have more tokens other than the equivalent of gold we are holding in store.”
- Zimbabwe's economy is heavily dollarized, with 76% of expenditure settled in USD, according to data from Mariblock.
- The widespread demand for foreign currencies, particularly the United States dollar, is a result of the local currency losing its value as a store of value due to hyperinflation.
- The gold-backed CBDC was introduced to mop up excess liquidity within the market as well to serve as a preferred transactional asset instead of the USD.