Cryptocurrency- Zimbabwe will soon introduce a gold-backed digital currency, according to the state-run Sunday Mail.
- Central bankers hope the tokens will help to stabilize the Zimbabwe dollar.
Zimbabwe is preparing to launch a gold-backed digital currency, according to a report from the state-run Sunday Mail that cited John Mangudya, the governor of the country's central bank.
The gold-pegged tokens will act as hedges against ongoing currency volatility, and serve as a more effective store of value than the Zimbabwe dollar, the publication said.
Hyperinflation has plagued Zimbabwe's economy for over a decade, ravaging the country's currency, which has rapidly weakened against the greenback since the beginning of 2022.
Since 2020, the government has allowed the use of foreign currencies including the US dollar and the Chinese yuan.
Last year, the Reserve Bank of Zimbabwe introduced gold coins as alternative legal tender. Gold is considered a haven during times of economic uncertainty as well as a hedge against inflation, which hit 230% in Zimbabwe in February.
The central bank plans to issue more of the "Mosi-oa-tunya" gold coins as well as launching the digital tokens, hoping that both currencies will be more reliable stores of value than the volatile Zimbabwe dollar.
"What we have noticed is that demand for foreign currency, apart from being driven by the need to import goods and services in Zimbabwe, is also viewed as a store of value," RBZ governor Mangudya told the Sunday Mail.
"We are addressing this demand for store of value by increasing the number of gold coins in the market so that we manage that demand," he added.
"We shall also soon be introducing digital gold tokens to ensure that those with low amounts of local currency are able to purchase the gold units so that we leave no one and no place behind."
Mangudya also blamed the current currency volatility on the ongoing tobacco auction season, which he said leads to "expectations of increased foreign currency supply" due to local farmers being paid in the US dollar and other alternatives to Zimbabwe's dollar.
Read more: Zimbabwe will issue gold 'Mosi-oa-tunya' coins as sky-high inflation slams local currency