Gold coin and gold-backed Digital Token prices as at 09 November 2023

The Zimbabwean Government last year launched gold tokens which are sold in US dollars and local currency, but the latter is charged at a 20% margin above the willing-buyer willing-seller interbank mid-rate.

One of the main characteristics is the pricing model, which is based on the standard international gold price determined by the London Bullion Market Association.

Users may buy or redeem the token and get a 20% premium on the mid bid-offer rate, however, the funds are settled in local currency.

The original objective of providing an alternative investment avenue for citizens to maintain the value of their savings might expand to include payments.

Zimbabwe has long struggled with currency depreciation and exchange rate volatility, so the central bank had initially conceived the digital gold tokens as a store of value.

And the willing-buyer willing-seller interbank mid-rate serves as the midpoint between buying and selling rates, reflecting the rate at which banks are willing to buy and sell currencies amongst themselves.

This rate is influenced by market factors such as supply and demand, and is commonly used as a benchmark for financial transactions and a reference rate for exchange rates taken by banks and financial institutions.

Zwnews