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The Reserve Bank of Zimbabwe sold 14 billion Zimbabwean dollars worth of gold-backed digital tokens, worth about $39 million, despite a warning from the International Monetary Fund.
On May 12, Zimbabwe’s central bank announced that it had received 135 bids worth ZW 14.07 billion to buy a gold-backed cryptocurrency.
According to XE.com, the Zimbabwean dollar is officially trading at 362 ZWD to the US dollar (but much higher on the street), which is roughly $38.9 million.
The cryptocurrency tokens, first introduced in April, are backed by 139.57 kg of gold, and the sale will last from May 8 to May 12.
The tokens were sold at a minimum price of $10 for individuals and $5,000 for corporations and other organizations. Tokens have a minimum holding period of 180 days and can be held in e-gold wallets or e-gold cards.
The move is reportedly part of efforts to stabilize the country’s economy and the ongoing depreciation of the local currency against the US dollar.
A second round of digital token sale will be held and the bank has requested bids this week to be settled by May 18th. According to local media reports, RBZ Governor Dr. John Mangoudia commented:
“The issuance of gold-backed digital tokens is intended to expand the store of value tools available in the economy and increase the divisibility of investment vehicles, as well as increase their access and use by the public.”
The move follows the International Monetary Fund’s warning against the African country’s plan for a gold-backed currency, arguing that it should liberalize its foreign exchange market instead, according to a May 9 Bloomberg report.
“A careful assessment is needed to ensure that the benefits of this measure outweigh the costs and potential risks, including, for example, macroeconomic and financial stability risks, legal and operational risks, management risks, and the cost of forgone foreign exchange reserves,” the IMF spokesman said. Bloomberg.
Related: Central Bank of Zimbabwe to issue gold-backed digital currency: report
Zimbabwe has been struggling with currency volatility and inflation for more than a decade. In 2009, the country adopted the US dollar as its currency after a period of hyperinflation that devalued the local currency.
The Zimbabwean dollar was reintroduced in 2019 to revive the local economy, but volatility again ensued.