Zimbabwe Set to Launch Gold-Backed Digital Tokens for Retail Transactions

In a groundbreaking move to reshape Zimbabwe’s financial landscape, the Reserve Bank of Zimbabwe (RBZ) is on the verge of introducing a Gold-Backed Digital Token (GBDT) for retail use.

This initiative comes as a response to the token’s massive success among investors, with the RBZ calling the enthusiastic response “commendable” in a recent report.

The RBZ’s pursuit of the GBDT gained momentum in April when it announced its intention to create a gold-backed digital asset. The initiative gained traction with 11 issuances, representing an impressive 325 kilograms (716.5 pounds) of gold by July 21, as disclosed in a midterm financial report released on August 9.

What sets the GBDT apart is its tangible backing—the tokens are backed by physical gold reserves held by the RBZ.

After the success of the first phase, the RBZ is now coming to elevate the GBDT’s role to a transactional medium for the public.

In a statement by the RBZ, it said: “The Bank is at an advanced stage in preparations for the rolling out of GBDTs for transactional purposes in Phase II of the project. It is envisaged that the transactional phase will see GBDTs complementing the demand for the US dollar in domestic transactions as retailers will be offered a safer, more convenient, and value-preserving medium of exchange.”

The launch of the GBDT comes against the backdrop of Zimbabwe struggling with economic challenges, including triple-digit inflation that reached 175.8% in June, coupled with the heavy reliance on the U.S. dollar in local trade. In this context, the GBDT emerges as a promising solution, poised to complement and potentially lessen these pressing economic concerns.

GDBT As A Transforming Replacement For CBDC

The path toward the GBDT’s introduction is intertwined with the RBZ’s efforts in the realm of digital currency innovation.

Since July 2022, the central bank has been diligently working towards the development of a Central Bank Digital Currency (CBDC). The GBDT, with its characteristics mirroring those of a CBDC, stands as a foundational stepping stone in their digitization.

The significance of the GBDT’s success is further shown by its potential influence on the broader CBDC landscape. As the RBZ started a course for a fully functional CBDC, the GBDT is built to serve as a prototype and forerunner to digital currency. Its success not only validates the idea of digital assets within the Zimbabwean populace but also signifies a significant step toward realizing the nation’s digital financial future.

With Zimbabwe’s gold reserves backing GBDT, it offers a unique blend of security and divisibility, making it an attractive option for both investors and everyday users. This innovation has not only captured the attention of investors but has also prompted the RBZ to explore further avenues of digital financial transformation.

Today's #Fintech Digest includes the Reserve Bank of Zimbabwe preparing to roll out its gold-backed digital tokens for transactions, and some fake news about #Ripple working with the Reserve Bank of New Zealand on #CBDC development on the #XRP Ledger. https://t.co/SFR6O90maT pic.twitter.com/aw8IeCkiSj

— John Kiff (@Kiffmeister) August 14, 2023

As the countdown to the official launch of the GBDT continues, the RBZ is gearing up for a comprehensive national awareness campaign. This initiative aims to educate the public on the benefits of the GBDT and its potential to reshape financial transactions in Zimbabwe. The RBZ envisions the GBDT as a versatile complement to the U.S. dollar, providing the public with a seamless and secure means of conducting domestic transactions.

NB: Any Information provided is NOT FINANCIAL ADVICE. Do Your Research before making any Financial Decisions.