The Reserve Bank of Zimbabwe (RBZ) has announced plans to introduce a gold-backed digital currency as legal tender – as part of the country's intervention to help stabilize the local currency, the Zim dollar – according to a report by Sunday Mail.
This follows an announcement by the RBZ in August 2022 that it was exploring the creation of a central bank digital currency (CBDC).
According to the RBZ, the tokens will be a form of electronic money supported by the country's gold reserves, which will be held by the central bank. The primary objective of this initiative is to offer an alternative to the Zim dollar, which is notoriously volatile, by allowing people to exchange their money for the gold-backed token, to hedge against the fluctuation of the local currency.
Given that Zimbabwe operates with both the Zim dollar and the U.S. dollar, this move could help improve financial stability in the country. In the past year alone, the exchange rate has fluctuated from 1 U.S. dollar being worth approximately 150 Zim dollars to it now being closer to 1,000, according to Investing.com.
Zimbabwe is part of a number of African countries that are looking to develop their own digital currencies, in a move meant to boost financial inclusion, slash payment fees and make money smarter. Nigeria was the first African country to launch its eNaira in October 2021. Other African countries like Kenya, South Africa and Morroco are also ranked at the top for possible adoption.