Zimbabwe is putting all of its fate into stabilizing the economy with the gold-backed digital token.
The Reserve Bank of Zimbabwe has recently sold 14 billion Zimbabwean dollars, approximately $39 million, worth of gold-backed digital tokens.
It is worth noting that the action was taken despite a warning from the International Monetary Fund (IMF).
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On May 12th, the central bank of Zimbabwe revealed that it had welcomed 135 applications for around 14.07 billion Zimbabwean dollars to purchase the gold-backed cryptocurrency.
With the official exchange rate being 362 Zimbabwean dollars to one US dollar, the value of acquired tokens is estimated to be around $38.9 million.
These crypto tokens, introduced in April, are backed by 139.57 kilograms of gold. The sale of these tokens took place from May 8th to May 12th. The minimum purchase price was set at $10 for individuals and $5,000 for corporations.
The gold-backed tokens must be held for a minimum of 180 days and can be stored in e-gold wallets or on e-gold cards.
This decision is reportedly a part of the country's attempt to stabilize its economy and prevent the local currency from depreciating further against the US dollar.
For a second round of digital token sales, the bank is asking for applications to be submitted by May 18th. According to local reports, RBZ Governor Dr. John Mangudya stated:
The issuance of the gold-backed digital tokens is meant to expand the value-preserving instruments available in the economy and enhance divisibility of the investment instruments and widen their access and usage by the public.
However, the IMF had warned Zimbabwe against this gold-backed currency plan, suggesting instead that the country should liberalize its foreign exchange market.
The IMF spokesperson told Bloomberg that a careful assessment should be conducted to ensure the benefits of this measure outweigh the potential risks.
A careful assessment should be conducted to ensure the benefits from this measure outweigh the costs and potential risks including, for instance, macroeconomic and financial stability risks, legal and operational risks, governance risks, cost of forgone FX reserves.
Zimbabwe has chosen to ignore the IMF's warning and is moving forward with its gold-backed crypto tokens to stabilize its economy.
