The governor of Zimbabwe’s central bank, John Mangudya, has recently revealed his intentions to introduce a digital currency that will be supported by the nation’s $100 million in gold reserves.
The initiative is designed to tackle the cash scarcity in the country and encourage greater financial inclusion. This announcement holds considerable importance, especially in light of Zimbabwe’s current severe economic predicament, which is marked by hyperinflation and a lack of foreign currency.
The Zimbabwe Digital Currency
According to Mangudya, the planned digital currency in Zimbabwe will have the backing of gold reserves held by the central bank. The bank will be accountable for the issuance of the currency, which will subsequently be available for trading on a blockchain platform. The governor has revealed that the bank is presently in talks with various technology firms to create the platform.
While some experts have expressed skepticism about Zimbabwe’s ability to sustain a digital currency, others have raised doubts about the safety and security of the gold reserves supporting the currency.
Official reports from state-owned media have indicated that Zimbabwe currently holds 350 kilograms (12,346 ounces) of gold in reserves. Central Bank governor, John Mangudya, has confirmed this news. The country has set a target of a 14% increase in gold production this year, with the goal of reaching 40 tons. In the first quarter of 2021, Zimbabwe reportedly earned $377 million from gold production.
However, based on information provided by Fidelity Gold Refineries, the only refinery in the country, the earnings for this year have decreased from the previous year’s $463 million.
Introducing Gold Coins
The monetary policy committee recently approved a plan for a gold-backed digital currency, following the introduction of gold coins last June.
The coins were introduced as a means of storing value and supporting the local unit. Innocent Matshe, the deputy governor of the Reserve Bank of Zimbabwe, has announced that the central bank is in the process of determining a launch date for its gold-backed digital currency.