As part of efforts to stabilize the local currency, the Reserve Bank of Zimbabwe (RBZ) is planning to introduce a gold-backed digital currency that will be used as legal tender in the country.

The digital gold tokens will be electronic money backed by gold reserves held by the RBZ, and will allow those holding small amounts of Zimbabwe dollars to exchange their money for tokens to store value and hedge against exchange rate volatility.

This initiative marks the first step by the central bank to use the country’s gold reserves to anchor the Zimbabwe dollar.

The RBZ is also considering releasing more Mosi-oa-Tunya gold coins onto the market to tackle the recent depreciation of the Zimbabwe dollar on the parallel market.

The digital gold tokens will complement the gold coins by providing an alternative investment avenue for users to store value and transact.

The RBZ Governor, Dr John Mangudya, has stated that the introduction of these tokens and coins will address the demand for a store of value and will ensure that even those with low amounts of local currency can purchase gold units.

Several central banks around the world are also exploring the development of their own digital currencies to boost financial inclusion and make money smarter.