12 May 2023 Jane Whitmoore
The Reserve Bank Of Zimbabwe To Push Gold-Backed CBDC
In order to help investors protect their wealth in the face of the nation's skyrocketing inflation, the Reserve Bank of Zimbabwe (RBZ) has announced the introduction of a digital currency backed by gold.
To make it easier for corporate and individual investors to apply for issuance, Zimbabwe's central bank disclosed the information via a formal press release. According to the release, the token will be made available through commercial institutions and would have both local and foreign currency values.
“The RBZ Gold-backed Digital Tokens are being issued to expand the value-preserving instruments available in the economy, enhance divisibility of the investment instruments and widen their access and usage by the public,” the bank noted in its statement.
Commercial banks in Zimbabwe will open new kinds of accounts to store the gold tokens via e-gold wallets or e-gold cards, according to the country's banking authority. It appears that owners of actual gold coins can trade them in for equivalent amounts of digital currency.
The fractionalization of Zimbabwe's new gold-backed tokens, which enables individual investors to purchase tokens for as little as $10, is one of its key features. The minimum investment required from corporate investors is $5,000, and the RBZ has the authority to accept or refuse applications.
The central bank will typically reject applications if the funding source is a loan or the proceeds of a crime. To comply with federal anti-money laundering (AML) regulations, commercial banks have been encouraged to strengthen their Know Your Customer (KYC) procedures.
“The digital tokens can be redeemed after the vesting period of 180 days, based on the international gold price as determined by the London Bullion Market Association (LBMA) PM fix, payable in either local or foreign currency as is the case with physical gold coins,” the bank added.
It is now unknown whether Zimbabweans will accept the gold-backed tokens in the same way that they did the US currency. According to one group of analysts, the high demand for real gold coins is a sign that investors will be interested in its digital iteration.
The minimum investments of $10 and $5,000 for both private individuals and businesses have been lauded by experts as an effort to pique investor interest. However, there are worries that some investors would continue to invest in U.S. dollars rather than the investment vehicles offered by the central bank.
Persistence Gwanyanya, a member of the RBZ Monetary Policy Committee, commented that “the acceptance of digital gold-backed tokens by key wholesalers and retailers will be a huge relief to the transacting public,”central banks currency token cryptocurrency news crypto news digital Gold CBDC