Last Updated on May 15, 2023 by Bitfinsider

Despite a warning from the International Monetary Fund, the Reserve Bank of Zimbabwe issued digital tokens backed by gold for 14 billion Zimbabwean dollars, or around $39 million.

On May 12, the Zimbabwean central bank revealed that it has received 135 requests for a total of 14.07 billion Zimbabwean dollars to purchase the cryptocurrency backed by gold.

According to XE.com, the official exchange rate for the Zimbabwean dollar is 362 ZWD to USD, but on the street, this rate is substantially higher, making the hoard nominally worth $38.9 million.

The 139.57 kg of gold backing the cryptocurrency tokens, which were first launched in April, are available for purchase from May 8 to May 12.

The minimum price for buying a token was $10 for private buyers and $5,000 for businesses and other entities. The tokens have a 180-day minimum vesting period and can be kept on e-gold cards or in e-gold wallets.

According to reports, the action is intended to stabilize the economy of the nation and stop the ongoing devaluation of the local currency in relation to the US dollar.

The bank has asked for applications to be submitted this week so that they can be resolved by May 18. A second round of digital token sales will be launched. RBZ Governor Dr. John Mangudya reportedly said as follows: “The issuance of the gold-backed digital tokens is meant to expand the value-preserving instruments available in the economy and enhance divisibility of the investment instruments and widen their access and usage by the public.”

According to a report, the decision was made in response to the IMF’s warning against the African country’s proposed use of a gold-backed currency, urging that it should instead liberalize its foreign exchange market.

According to an IMF spokeswoman, “a careful assessment should be made to ensure that the benefits from this measure outweigh the costs and potential risks, including, for example, macroeconomic and financial stability risks, legal and operational risks, governance risks, cost of forgone FX reserves.”

For more than ten years, Zimbabwe has struggled with inflation and currency fluctuation. Following a period of hyperinflation that rendered the native currency useless, the nation adopted the USD as its official currency in 2009.

In an effort to boost the local economy, the Zimbabwe dollar was reinstated in 2019, but volatility soon returned.