The Reserve Bank of Zimbabwe has sold gold-backed digital tokens worth 14 billion Zimbabwean dollars, or about $39 million, despite a warning from the International Monetary Fund.
The 12th of May, Zimbabwe’s central bank announced that it had received 135 requests totaling 14.07 billion Zimbabwean dollars to buy the gold-backed cryptocurrency.
The Zimbabwean dollar is officially trading at 362 Zimbabwean dollars to the US dollar, according to XE.com – but much higher on the street – making the reserve nominally worth about 38.9 million dollars.
The crypto tokens, first introduced in April, are backed by 139.57 kilograms of gold, and the sale will take place from May 8-12.
The tokens were sold at a minimum price of $10 for individuals and $5,000 for companies and other entities. The minimum acquisition period for the tokens is 180 days, and they can be stored in electronic gold wallets or electronic gold cards.
Apparently, The move is part of an effort to stabilize the country’s economy and the continued depreciation of the local currency against the greenback.
A second round of digital token sales will take place and the bank has called for applications to be submitted this week to be settled by May 18. According to local media, RBZ Governor Dr. John Mangudya commented:
“The issuance of gold-backed digital tokens is intended to expand the value preservation instruments available in the economy and to improve the divisibility of investment instruments and broaden their access and use by the public.”
The move comes after the International Monetary Fund recommended against following the African nation’s plan to create a gold-backed currency.arguing that it should liberalize its foreign exchange market, according to a Bloomberg report on May 9.
“Careful assessment should be carried out to ensure that the benefits of this measure outweigh the costs and potential risks, including, for example, macroeconomic and financial stability risks, legal and operational risks, governance risks and the cost of lost foreign exchange reserves,” said a spokesman from the IMF to Bloomberg.
Zimbabwe has struggled with currency volatility and inflation for more than a decade. In 2009, the country adopted the US dollar as its currency after a period of hyperinflation that rendered the local currency worthless.
The Zimbabwean dollar was reintroduced in 2019 to revive the local economy, but volatility returned.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.