Gold-Backed Tokens To The Rescue: Can They Save Zimbabwe's Currency Crisis?

The Reserve Bank of Zimbabwe (RBZ) is inviting financial organizations to take part in the launch of a digital token backed by gold.

The minimum subscription amount for individuals is set at $10, while financial institutions and corporations must subscribe for a minimum of $5,000.

The RBZ declared in April that these tokens, intended to combat the nation's unsteady local currency, would be released on May 8.

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After a staggering rise to 285% in 2022, Zimbabwe's inflation rate was recorded at 87.6% in March. The issuance and use of the token have been separated into two phases by the central bank.

Tokens will be issued for investment purposes and sold through banks in the initial phase.

In the second stage, tokens will be kept in digital wallets or cards to enable transactions between individuals and between individuals and businesses.

According to the bank, "Holders of physical gold coins, at their discretion, will be able to exchange or convert, through the banking system, the physical gold coins into gold-backed digital tokens."

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