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Zimbabwe’s Gold-Backed Cryptocurrency Is Making A Growth

zimbabwes gold backed cryptocurrency is making a growth

Zimbabwe is currently trying to solve its currency problem by deploying its gold reserves as a countermeasure, and has been doing this to escape from many economic crises since the Mugabe years. The government of Zimbabwe suggested a gold-backed cryptocurrency might be the solution against these ravaging inflation rates and huge decreases in the national currency of the country. The continental press was fast to criticise this policy just after the announcement of the implementation of this measure. But the Zimbabwean government is stout on this matter, and it seems that the first batch of these tokens will begin to circulate soon.

zimbabwes gold backed cryptocurrency is making a growth 2

A Brand New Currency for Zimbabwe

Zimbabwe is an exceptional country regarding its inflation rate, as the inflation shot up tremendously over the past twenty years. To resolve this, the Zimbabwean government tried many solutions with various outcomes. The adoption of the US dollar, followed by a ban on the currency at the decade’s conclusion, and finally the introduction of a whole new local currency in 2019. The introduction of gold coins last year did not ameliorate the problem either.

Zimbabwe’s central bank then decided to issue a gold-backed digital currency on April 28 which will derive from the 35 tons of national gold production of the country. It will be possible to buy these tokens in Zimbabwe dollars and US dollars. The minimum amount to buy will be $10 for individuals and  $5000 for firms or institutions. The price of these tokens will be determined by the international price of gold set by the London Bullion Market Association. The details regarding this news are accessible on official government documents.

Tinashe Murapata Suggests that this is a Distraction

Most of the national and continental press is asking whether it is the right time for such an announcement or not, and questioning the initiative’s relevance. For the economist Tinashe Murapata, this initiative only serves as a distraction from the country’s real problems. “The issuance of these tokens has absolutely no relation to what is happening on the ground, it is a diversion! The central bank should rather deal with the fall in the value of the national currency.”

He also questions the sustainability of the project. Tinashe Murapata suggests that the central bank does not provide certain details regarding the storage or the management of this gold as no formal audit has been conducted yet. He thinks that this project is a temporary response to the recurring economic problems of Zimbabwe.

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