The Reserve Bank of Zimbabwe is about to introduce a gold-backed digital currency that will serve as legal tender in the country. This is a government initiative to stabilize the national currency, which is going through a strong devaluation against the US dollar.
According to a note from the local Sunday Mail, the measure will allow small amounts of Zimbabwean dollars to be exchanged for the gold digital token, which will allow more Zimbabweans to protect themselves from the volatility of the currency. Central bank governor John Mangudya said the plan was intended to “leave no one and no sector behind.”
Zimbabwe’s currency trades at almost 1,001 Zimbabwean dollars to every US dollar, but it normally trades for Z$1,750 on the streets of Harare, the country’s capital, according to Bloomberg. Zimbabwe’s annual consumer price inflation hit its lowest level in a year in March at 87.6%, down from 92% in February.
According to Mangudya, the parallel market exchange rate is expected to stabilize after tobacco farmers receive their payments in US dollars in the coming weeks. The authority stated that the current volatility of the exchange rate was due to “expectations of a greater supply of foreign currency” in the market due to the tobacco season.
Currency dysfunction in Zimbabwe has led to a lack of small change in the country, according to a March Wall Street Journal story. Businesses have begun printing their “own money,” often on handwritten slips of paper, so users can pay for future purchases.
Zimbabwe has struggled with currency volatility and inflation for more than a decade. In 2009, the country adopted the US dollar as legal tender after a bout of hyperinflation. In 2019, the Zimbabwean dollar was reintroduced in an effort to revive the country’s struggling economy. Last year, the government decided to switch back to using the US dollar in an attempt to curb rising prices in the country.
Cryptocurrency adoption has grown in many African countries as a result of economic challenges. According to Chainalysis, the Middle East and North Africa region is the fastest growing crypto asset adoption region in the world thanks to cross-border remittances, with more than $566 billion in cryptocurrency transfers between July 2021 and June 2022. , 48% more than the previous year.
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.
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.