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Gold-backed digital token in Zimbabwe now turns into a payment method

On October 5th, Zimbabwe Gold (ZiG), a digital token backed by gold reserves, was officially introduced as a payment method, as announced by the Reserve Bank of Zimbabwe (RBZ). The RBZ had initially unveiled this project back in April 2023, emphasizing that each digital token issued would be backed by a corresponding physical quantity of gold held in the central bank’s reserves. Physical gold tokens had been introduced by the RBZ the previous year, and their adoption had been successful.

The primary goal behind both the physical gold tokens and the newly launched ZiG is to encourage local investors to invest in national assets rather than holding American dollars, a challenging task in a country grappling with triple-digit inflation levels. As Dr. John Mangudya, the RBZ Governor, previously had 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.”

The RBZ has established various pricing levels for ZiG based on the weight of its gold reserve. For instance, one can purchase 1 ounce of ZiG for $1,910 or 0.1 ounce for $191. According to the Bank, on September 28th, investors acquired the equivalent of 17.65 kilograms of ZiG, using both Zimbabwean and American dollars for payment. The total amount of ZiG sold since previous rounds of digital token sales has reached approximately 350 kilograms of gold.

Zimbabwe has been grappling with currency instability and soaring inflation for more than a decade. In 2009, the country adopted the U.S. dollar as its official currency to combat hyperinflation, which had rendered the local currency nearly worthless. In an effort to rejuvenate the domestic economy, Zimbabwe reintroduced its own currency in 2019. However, this move was followed by a resurgence of currency volatility.

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