Vusumuzi Dube
Judith Phiri, Business Reporter
THE Reserve Bank of Zimbabwe (RBZ) has said the Zimbabwe gold-backed digital token (ZiG) was now one of the means of payment for domestic transactions, over and above its value-preservation purpose.
The ZiG is to be used as legal tender for transacting in the country as part of interventions to stabilise the local currency and is a form of electronic money backed by gold held at the RBZ. It represents the first steps by the central bank towards using the country’s gold reserves to anchor the Zimbabwe dollar.
Monetary authorities have envisaged the digital gold tokens will allow those holding small amounts of Zimbabwe dollars to exchange their money for tokens in order to store value and hedge against exchange rate volatility.
The development comes as the RBZ is also mulling releasing more Mosi-oa-Tunya gold coins onto the market to tame the recent depreciation of the Zimbabwe dollar on the parallel market.
In a statement on Thursday announcing the introduction of the ZiG as a means of payment, RBZ Governor, Dr John Mangudya said: “In line with the resolutions of the bank’s Monetary Policy Committee at its meeting of 26 September 2023, the bank wishes to advise that with effect from 5 October 2023, ZiG will become one of the means of payment for domestic transactions, over and above its value-preservation purpose.”
He said the value of ZiG will be at par with the value of the physical Mosi-oa-Tunya gold coin and will remain informed by the international gold price.
Dr Mangudya said banks will maintain dedicated ZiG accounts and intermediate transactions in ZiG in the same way they intermediate transactions in local and foreign currency.
“The applicable intermediated money transfer tax (IMTT) will be half of the IMTT applicable to transactions in foreign currency and the relevant legal instrument to that effect will soon be published. The Bank has enlisted the services of external auditors to validate the availability and adequacy of gold to back ZiG at any given time,” he added.
An increasing number of central banks around the world are starting to develop their own digital currencies, in a development meant to boost financial inclusion, slash payment fees and make money smarter.
Russia is presently working with friendly countries, including Iran and China, to create clearing platforms for cross-border settlements in gold-backed digital currencies in an effort to abolish transactions in fiat currencies like the United States dollar and the Euro.
Online Reporter