Zimbabwe’s central bank rolls out digital tokens backed by gold

As part of its efforts to modernize its financial institutions, Zimbabwe’s central bank recently announced the launch of gold-based digital tokens that will be used for retail transactions in the African country.

The move comes at a time when the country is seeking to stabilize its official currency as inflation rates hit the roof. The Reserve Bank of Zimbabwe’s (RBZ) decision to roll out digital assets will further help it in providing its citizens with dependable financial instruments to invest in. Initially, the central bank rolled out the tokens by issuing physical gold coins. The scheme gained a lot of interest from investors.

Buoyed by the success of the initiative, RBZ went on to roll out GBDT by replacing physical gold coins with digital assets which were not only more accessible but also flexible.

Every GBDT will be backed by physical gold that will be locked in RBZ’s vaults. As these tokens can be divided into smaller assets, they make for a convenient option for making retail transactions.

John Mangudya, RBZ Governor, underlined the impressive response of investors to the GBDT initiative. Just a month into its launch, RBZ issued the GBDT token 11 times while earning US$7,794.87 by catering to 590 applications.

He stated that the campaign is aimed at spreading awareness about the potential and advantages of using the GBDT, which is likely to complement the US dollar in retail transactions.

According to reports, the GBDT rollout will be paving the way for a central bank digital currency. In July 2022, the Zimbabwe cabinet gave a green light to the development of a CBDC. A recent survey conducted to gauge the public’s response showed that around 71% of the respondents said they were looking forward to exploring the potential of the CBDC. The move could change the prospects of the Top 10 cryptocurrencies that are in huge demand in Zimbabwe.

Experts believe that the GBDT project will serve as a foundation for the upcoming CBDC, due to their similar features. The similarity in their features also reflects RBZ’s future-ready approach and readiness to transform Zimbabwe’s financial institutions. Currently, the central bank is in talks with various stakeholders to boost the adoption of GBDT-based cards. It’s unclear as of now how the launch of a CBDC would affect live cryptocurrency prices.

Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.

Author: Puskar Pande

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