On Sunday (April 23), local time, the central bank of Zimbabwe announced that it will launch a gold-based digital currency that will be traded in the country as legal currency.
The Reserve Bank of Zimbabwe (RBZ) explained that the introduction of a digital gold currency is the first step towards making the country's currency, the Zimbabwean dollar, stable and that the measure will allow people who hold small amounts of the Zimbabwean dollar to exchange their money for a digital gold currency as a token to realise value store and avoid the risk of exchange rate fluctuations.
In February, the bank cut its policy rate from 200% to 150% after claiming it was seeing downward momentum in inflation, extending the currency's slide.
The country plans to increase gold output this year, targeting a 14% increase from 2022 to 40 mt.
In the past year, global central banks' demand for gold has soared. According to data released by the World Gold Council, the amount of gold purchased by central banks increased 152% in 2022 to 1,136 mt, reaching a new high since 1967.
A recent annual survey of 83 central banks found that more than two-thirds of respondents believe that global central banks will continue to increase their gold holdings in 2023.
