2023-05-10 02:48:52
The Central Bank of Zimbabwe has launched a gold-backed digital currency. “Tokens” backed by gold reserves can be used for payments to individuals and businesses.
Digital currency
The aim is to boost the value of Zimbabwe’s national currency, which has been depreciating amid years of economic crisis in the southern African nation. The Bahamas, Jamaica and Nigeria have also already launched digital currencies backed by their central banks. Other countries, including the United States, the European Union, China and the UK, are conducting trial runs.
How to implement?
The new tokens in Zimbabwe are backed by physical gold held by the bank. The Governor of the Reserve Bank of Zimbabwe said it came into circulation on May 8.
People can buy tokens through banks and make transactions using e-gold wallets or e-gold cards held by banks, he said. Confidence in Zimbabwe’s currency has been eroded by hyperinflation, forcing the government to resort to new experiments.
Zimbabwe’s economic chaos
After independence in 1980, the Central Bank of Zimbabwe was able to bring in policies that suited the economy. In those times inflation was only 10 percent to 20 percent. But in the 1990s, when the government introduced a land reform program, the economy began to collapse.
During the land reform era, land was redistributed from the minority to the disenfranchised majority of black Zimbabweans, but this failed due to ineffective planning and corruption by senior officials. This led to a significant decline in agricultural production, a major source of exports, foreign exchange and employment. This was followed by a sharp decline in tax revenue with the collapse of the economy. With this, the government started trying to spend by printing money. This move fueled inflation in the country.
Runaway inflation
Since 2000, Zimbabwe has been experiencing hyperinflation. This again led to currency weakening and inflation. In 2009, the government decided to replace the Zimbabwe dollar with the US dollar. But things got out of hand when the black currency of the US dollar came down in Zimbabwe. Inflation has risen to 676 percent in 2020.
With hyperinflation and the people of Zimbabwe losing faith in their currency, people began to believe in cryptocurrencies as well.
The new digital currency is expected to fix Zimbabwe’s troubled economy. Its people also dream that the country will reach a stable and orderly economy through the new digital currency, from the times when the government stopped publishing official inflation figures.
English Summary : Zimbabwe and Its Gold Backed Digital Currency
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