- The Central Bank of Zimbabwe has among its plans to launch a digital currency that is backed by gold which would have the characteristics of a CBDC and would be legal tender.
- The new currency will be used for transactions within the nation as part of its plans to stabilize the local currency.
Bitcoin is a real alternative to traditional money and is commonly known as digital gold due to certain characteristics. The African country Zimbabwe seems to have taken the concept literally and raised a proposal that currently does not respond to anyone in the world.
According to different reports, in which appears the CryptoNews, The Central Bank of Zimbabwe has among its plans to launch a digital currency that is backed by gold. This would have the characteristics of a CBDC (Central Bank Digital Currency) and would be legal tender.
It is worth noting that the African country is one of the largest exploiters of precious minerals in the world. However, many of these farms are carried out by foreign companies, leaving the people with nothing. For a reason, despite all their wealth, they have the 106th lowest GDP in the world.
“The new currency will be used for transactions within the nation as part of their plans to stabilize the local currency.”published The Sunday Mail. Like many other underdeveloped countries, Zimbabwe is experiencing a difficult economic situation that includes inflation and the depreciation of its currency, the Zimbabwean dollar (ZWL).
The authorities explained that the digital tokens will present gold in physical possession by the Central Bank. What seems unlikely is that the same owners of digital gold will ever be able to access physical gold in a real way. The support of the precious metal was a dynamic that the United States established during the last century but that really does not apply anymore.
“Soon we will introduce digital gold tokens to ensure that those with little local currency can purchase the gold units, so we leave no one and no place behind“said the governor of the Central Bank, John Mangudya.
In accordance with CryptoNewsthe introduction of this token seeks that citizens who have small Zimbabwean dollars to exchange them for the new token as a store of value and hedge against the volatility of exchange rates
A response to inflation
Just as Argentina, one of the countries with the highest inflation in the world, suffers from drought, Zimbabwe sees its currency depreciate from the low expectations generated by its tobacco season, which began last month. With proposed goals for the moment they have not been met and this has had a full impact on its weak economy
In addition to the digital alternative, Mangudya explained that they are behind the possibility of reviving the Mosi-oa-Tunya gold coin project. Last year they were launched on the market to stabilize the local dollar, although they did not manage to calm the waters of a country that is extremely revolutionized both socially and economically.
The place Bloomberg reported that the local currency is officially quoted at ZWL 1,000 for every dollar, but is traded unofficially for ZWL 1,750. In 2019, the country recovered its currency after having made it obsolete in 2009.
That year, in the face of hyperinflation that made its currency lose all kinds of value, the US dollar became legal tender. Currently, both currencies coexist within the African economy.
At the moment there are no major reports on the use of cryptocurrencies to face the crisis in the country. Quite the opposite happens in Nigeria, a country in which its citizens have taken refuge in Bitcoin, Ethereum and the rest of the digital assets to guard against the inflation of their currency.
Zimbabwe has devised a new plan to curb its situation and it includes, for the first time, a digital currency. Is it the solution to the problems that currently affect your economy?
You might be interested in: