Key points to remember
- Despite IMF warnings, the Reserve Bank of Zimbabwe received 135 requests for gold-backed crypto tokens.
- The apps have amassed Z$14.07 billion in gold-backed tokens in hopes of reviving the Zimbabwean economy.
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The Reserve Bank of Zimbabwe (RBZ) has sold $39 million worth of gold-backed cryptocurrency, or about Z$14 billion, in a bid to stabilize the country’s economy and reduce the continued depreciation of the local currency against the US dollar, despite warnings from the International Monetary Fund (IMF).
The RBZ announced on May 12 that it had received 135 applications, totaling Z$14.07 billion, to purchase the 139.57 kilograms of gold-backed cryptocurrency. The tokens were sold at a minimum price of $10 for individuals and $5,000 for corporations and other entities.
The IMF has warned that the introduction of gold-backed crypto tokens could pose a risk to financial stability, stating that the sale of these tokens could pose a risk to the volatility of the Zimbabwean dollar and should instead strive to ” liberalize its foreign exchange market”. “, according to a May 9 Bloomberg report.
A spokesperson told Bloomberg that “careful assessment should be carried out to ensure that the benefits of this measure outweigh the potential costs and risks, including, for example, macroeconomic and financial stability risks, legal and operational risks, governance, the cost of abandoned foreign exchange (forex) reserves.
The RBZ defended the move, saying gold-backed crypto tokens would provide a more stable store of value than the Zimbabwean dollar, with the official app. indicating:
“RBZ gold-backed digital tokens are issued to expand the instruments of value preservation available in the economy, improve the divisibility of investment instruments, and broaden their access and use by the public.”
Gold-backed crypto tokens are should be an important tool in stabilizing the Zimbabwean economy, which has been under “tremendous pressure” to recover from its ever-increasing inflation, according at Bloomberg.
Zimbabwe’s President Emmerson Mnangagwa showed sensitivity to the struggles of the poor and marginalized when he promised to revive the economy in a 2019 State of the Nation Address, add:
“Getting the economy back up and running after it dies will take time, patience, unity of purpose and perseverance.”