Despite a warning from the International Monetary Fund, the Reserve Bank of Zimbabwe has sold 14 billion Zimbabwean dollars worth of gold-backed digital tokens, equivalent to approximately $39 million.
On May 12, the Zimbabwean central bank stated that it has received 135 applications for the gold-backed cryptocurrency for a total of 14.07 billion Zimbabwean dollars. According to XE.com, the Zimbabwean dollar is officially selling at 362 Zimbabwean dollars to one US dollar — but significantly higher on the street — making the hoard nominally worth roughly $38.9 million.
The crypto tokens, which were first launched in April, are backed by 139.57 kg of gold, and the sale will take place from May 8 to May 12. Individuals paid a minimum of $10 for the tokens, while corporations and other organisations paid a minimum of $5,000. The tokens have a minimum vesting duration of 180 days and can be stored in e-gold wallets or on e-gold cards.
The decision is purportedly part of an effort to stabilize the country’s economy and the local currency’s continuous slide versus the US dollar. A second round of digital token sales will be undertaken, and the bank has asked that applications be submitted this week so that they can be finalized by May 18. According to local media, RBZ Governor Dr. John Mangudya stated, “The issuance of gold-backed digital tokens is intended to expand the value-preserving instruments available in the economy, enhance divisibility of investment instruments, and broaden public access and usage.”
According to a May 9 Bloomberg story, the decision follows a warning from the International Monetary Fund against the African nation’s idea for the gold-backed currency, urging that it should instead liberalize its foreign exchange market.
“A careful assessment should be conducted to ensure that the benefits outweigh the costs and potential risks, such as macroeconomic and financial stability risks, legal and operational risks, governance risks, and the cost of foregone FX reserves,” an IMF spokesperson told Bloomberg.
For more than a decade, Zimbabwe has struggled with currency fluctuation and inflation. Following a period of hyperinflation that rendered the local currency worthless, the government adopted the USD as its currency in 2009. The Zimbabwe dollar was resurrected in 2019 in order to revitalize the local economy, however instability returned.