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Wendy Nyakurerwa-Matinde
THE Zimbabwean digital gold coin (ZiG) has proven to be popular among those seeking to preserve the value of their investments and earnings, Reserve Bank of Zimbabwe Deputy Governor, Dr Jesimen Chitika has said.
Dr Chipika said while the physical gold coins mopped up about ZWL35 billion in about a year, the digital gold coins have mopped up ZWL50 billion from the market in their three months of existence, hence the stability of the macro economic environment that we are seeing.
The Central Bank’s Deputy Governor said this on the sidelines of the Zimbabwe Association of Microfinance Institutions (Zamphi) CEOs Winter School in Nyanga where she was the keynote speaker.
She said the great uptake of the digital coin is premised on the fact that Zimbabweans are digitally comfortable.
“We introduced mobile money a long time ago ahead of many African countries so the uptake of the digital coin is showing us that our population is not afraid of technology,” said Dr Chipika.
As at August 3, 2023, the cumulative gold-backed digital coins purchased since May this year was 329.12 kilogrammes.
She said the monetary authorities realized that what people were looking for was value preservation.
“The gold coins were introduced to make sure that the population has an investment instrument which they can use to preserve value. Part of the instability was coming from the huge appetite for US dollars, thereby making the exchange rate unstable. The exchange rate feeds into the pricing system and then we see inflation, and ultimately everyone is suffers. The gold coins can be trusted by people in preserving the value of their earnings,” said the Deputy Governor.
Speaking on the affordability of the gold coins, Dr Chipika said this has been addressed through the introduction of smaller denominations.
“Initially we introduced a one ounce gold coin, and then the RBZ broke it down to half, quarter and one tenth of an ounce to make it affordable to ordinary people.
“We saw an improvement on the uptake of the smaller denominations but people were still saying even the tenth of an ounce was too expensive for ordinary Zimbabweans. That is what motivated the introduction of the gold-based electronic token whose characteristics are the same as the physical coins,” said Dr Chipika.
The smallest unit for the ZiG is one milligram, which costs around US$0.06 or ZWL330 at the prevailing official exchange rate.
“Surely any ordinary person can buy the milligram, which is one thousandth of a gram, if they want to preserve the value of their earnings. The population is very keen on the ZiG,” said Dr Chipika.
She, however, said considering that corporates have greater financial muscle, they currently have about 75 percent of the gold coins, while the rest are in small businesses and individuals.
For one to purchase the digital gold coins, one needs to be banked since the entire process takes place within the confines of banks.
One approaches their bank and applies for the coins. Their bank will then forward the application to the RBZ.
Once the application is approved by the central bank, a ZiG account is allocated to the applicant by their bank and the digital coins are deposited into that account.
The gold coins can be bought either in Zimbabwean dollars or foreign currency.
Although the gold coins will soon be used for day-to-day transactions through the e-gold cards, Dr Chipika stressed that digital coins are not a currency, but an investment tool that is issued and controlled by the RBZ.The ZiG is acceptable as collateral and also tradable.
The coins can be redeemed after a vesting period of 180 days.
Online Reporter