The introduction of the digital gold tokens, a form of
electronic money backed by gold held at the RBZ, will represent the first steps
by the central bank towards using the country’s gold reserves to anchor the
Zimbabwe dollar. Monetary authorities envisage that 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. RBZ Governor Dr John Mangudya
told our Harare Bureau that the parallel market foreign currency exchange rate
is expected to begin stabilising when tobacco farmers start receiving their
portion of United States dollar payments this week. The current exchange rate
volatility, he said, was caused by “expectations of increased foreign currency
supply” on the market when the tobacco marketing season opened in March.
“The movement in the parallel market rate is mainly because
of the expectations of increased foreign currency supply in the market when the
tobacco marketing season opened. However, the supply of foreign currency over
the past three weeks has been lower than expected. That expectation raised the
rates because people thought there will be more money in the market. With the
start of the tobacco marketing season, most of the funds have been going
towards servicing tobacco contractors’ obligations. Now the money will start
flowing into accounts of the growers themselves end of this month; that is when
most of them will start receiving their US dollar portions.”
The digital gold tokens, which are representative of gold
held in physical form by the issuing authority, are expected to complement the
Mosi-oa-Tunya gold coins through offering an alternative investment avenue to
store value and transact.
“What we have noticed is that demand for foreign currency,
apart from being driven by the need to import goods and services in Zimbabwe,
is also viewed as a store of value. It means anyone with local currency would
want to convert it to foreign currency. We are addressing this demand for store
of value by increasing the number of gold coins in the market so that we manage
that demand. We shall also soon be introducing digital gold tokens to ensure
that those with low amounts of local currency are able to purchase the gold
units so that we leave no one behind and no place behind.”
An increasing number of central banks around the world are
starting to develop their own digital currencies, in a development geared to
boost financial inclusion, slash payment fees and make money smarter. Russia is
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 US dollar and Euro.
Zimbabwe National Chamber of Commerce (ZNCC) chief
executive officer Mr Christopher Mugaga said: “Government should not be worried
much about parallel market rates but rather concentrate on putting in place
monetary policies that promote currency stability. With the way the world is
moving, policies such as gold digital tokens and gold coins are some of the measures
that will help with containing excess money in the economy.” Sunday Mail
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