Zimbabwe Introduces Gold-Backed Digital Tokens for Retail Transactions

The Reserve Bank of Zimbabwe (RBZ) has taken a significant step towards modernizing its financial landscape by announcing plans to introduce a gold-backed digital token (GBDT) for retail transactions.

The move comes as the country seeks innovative solutions to stabilize its local currency amidst soaring inflation rates.

RBZ’s introduction of the Gold-Backed Digital Tokens (GBDT) earlier this year aimed to address these challenges and provide accessible and reliable market-based instruments for investors.

The GBDT initiative began with the issuance of physical gold coins, which garnered considerable interest from investors.

Building on this success, RBZ unveiled the GBDT, a digital representation of physical gold that offers enhanced flexibility and accessibility.

Each GBDT is backed by actual physical gold held at the bank, ensuring intrinsic value and security. The digital nature of the tokens allows for easy divisibility, making them more convenient for everyday transactions.

RBZ Governor, John Mangudya, highlighted the remarkable response from investors to the GBDT offering. In just a month following its launch, the bank issued the token 11 times, catering to 590 applications totaling ZW$50.50 billion and US$7,794.87.

This positive reception underscored the potential for GBDT to contribute to stabilizing inflation and exchange rate expectations within the country.

Moreover, the GBDT is positioned to play a pivotal role in the development of a Central Bank Digital Currency (CBDC).

Cabinet approval was granted for CBDC development in July 2022, and a recent survey indicated that 71% of respondents expressed interest in a CBDC.

RBZ envisions the GBDT serving as the foundation for the CBDC initiative due to its existing CBDC-like features. This strategic alignment between the GBDT and CBDC development illustrates RBZ’s forward-thinking approach to modernizing Zimbabwe’s financial ecosystem.

RBZ is actively engaging with key stakeholders, including the Confederation of Zimbabwean Industries (CZI), to facilitate the adoption of GBDT-denominated cards.

As part of its efforts to promote the widespread use of GBDT, RBZ is planning a comprehensive national awareness campaign.

This campaign aims to educate the public about the benefits and functionality of GBDT, which is expected to complement the use of the US dollar in domestic transactions upon full implementation.