Governor John Mangudya of the Reserve Bank of Zimbabwe (RBZ) has announced the forthcoming introduction of digital tokens backed by gold. These tokens will serve as both a payment method and a store of value.
In a statement released on Friday, Mangudya outlined the two-phase implementation plan, with the first phase commencing on May 8, 2023. The gold-backed digital tokens will be available for purchase through banks using either foreign currency or Zimbabwe dollars. The statement reads:
Following the Monetary Policy Committee’s resolution on March 28, 2023, to complement the issuance of physical gold coins, the RBZ will now introduce gold-backed digital tokens starting from May 8, 2023.
These tokens will be fully backed by physical gold held by the RBZ.
As previously communicated, the introduction of gold-backed digital tokens aims to expand the range of value-preserving instruments in the economy. It also seeks to enhance the divisibility of investment instruments and increase their accessibility and usage by the general public.
The issuance and utilization of the gold-backed digital tokens will occur in two phases as outlined below:
Phase 1: Gold-backed digital tokens will be issued for investment purposes, with a vesting period of 180 days. These tokens can be redeemed in the same manner as existing physical gold coins. Banks will facilitate the sale of these tokens in both foreign currency and Zimbabwe dollars. Specific accounts, such as e-gold wallets or e-gold cards, will be created by banks to hold the gold-backed digital tokens. Holders of physical gold coins will have the option to exchange or convert them into gold-backed digital tokens through the banking system.
Phase 2: The gold-backed digital tokens held in e-gold wallets or e-gold cards will become tradable and enable Person-to-Person (P2P) as well as Person-to-Business (P2B) transactions and settlements. This means that the gold-backed digital tokens will function as a medium of exchange and a store of value.
The RBZ further advises that the pricing of gold-backed digital tokens in foreign currency will align with the pricing model of physical gold coins, as determined by the London Bullion Market Association (LBMA) PM fix.
For purchases made in Zimbabwe dollars, the payment for gold-backed digital tokens or physical gold coins will remain at the current 20% margin above the willing-buyer-willing-seller interbank mid-rate.
