Zimbabwe turns gold-backed digital token into payment method

On Oct. 5, the gold-backed digital token called, Zimbabwe Gold (ZiG), officially launched as a payment method. The launch was announced by the Reserve Bank of Zimbabwe (RBZ).

The RBZ introduced its new project in April 2023, highlighting that every issued digital token would be backed by a physical amount of gold held in the bank’s reserves. The RBZ first started issuing physical gold-backed tokens in 2022, claiming their successful adoption.

The mission behind both physical coins and the newly introduced ZiG is to persuade local investors to put their money into national assets and not United States dollars, which is not an easy task in a country with triple-digit inflation. RBZ Governor John Mangudya stated:

“The issuance of the gold-backed digital tokens is meant to expand the value-preserving instruments available in the economy and enhance divisibility of the investment instruments and widen their access and usage by the public.”

The digital tokens can be stored in either e-gold wallets or e-gold cards and are tradeable for peer-to-peer and business transactions.

The RBZ reported several price levels, for which ZiG could be both, depending on the weight of its gold reserve. Thus, one can buy 1 ounce of ZiG for $1,910 and 0.1 ounce for $191. According to the bank, on Sept. 28, investors bought the equivalent of 17.65 kilograms (kgs) in ZiG, paying with Zimbabwean and U.S. dollars. The total amount of ZiG sold since the previous rounds of digital token sales stands at around 350 kg of gold.

Zimbabwe has grappled with currency instability and rising inflation for more than a decade. In 2009, the nation adopted the U.S. dollar as its official currency in response to a period of hyperinflation that had rendered the local currency practically worthless. In an attempt to revitalize the domestic economy, Zimbabwe reintroduced its own currency in 2019. However, this move was followed by a resurgence of currency volatility.