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The Reserve Bank of Zimbabwe has sold Z$14 billion worth of gold-backed digital tokens worth around $39 million despite a warning from the International Monetary Fund.
On May 12, the central bank of Zimbabwe announced that it had received 135 applications worth Z$14.07 billion to buy the gold-backed cryptocurrency.
The Zimbabwe dollar is officially trading at 362 ZWD against USD according to XE.com (but much higher on the street), which makes the reserve worth around $38.9 million.
The crypto tokens, first introduced in April, are backed by 139.57 kilograms of gold, with the sale taking place from May 8 to May 12.
Results of the sale of gold-backed digital currencies. Source: Reserve Bank of Zimbabwe
The tokens were sold at a minimum price of $10 for individuals and $5,000 for corporations and other entities. The minimum vesting period for tokens is 180 days and they can be held in e-gold wallets or on e-gold cards.
The move would be part of an effort to stabilize the country’s economy and the continued depreciation of the local currency against the greenback.
A second round of digital token sales will take place and the bank has requested that claims be submitted this week to be settled by May 18. According to local media, RBZ Governor Dr. John Mangudya said:
The issuance of gold-backed digital tokens aims to expand the instruments of value preservation available in the economy and to improve the divisibility of investment instruments and broaden their access and use by the public.
The move follows a warning from the International Monetary Fund against the African nation’s plan for gold-backed currency, arguing that it should instead liberalize its foreign exchange market, according to a May 9 Bloomberg report.
Careful assessment should be carried out to ensure that the benefits of this measure outweigh the potential costs and risks, including, for example, macroeconomic and financial stability risks, legal and operational risks, governance, the cost of abandoned foreign exchange reserves, an IMF spokesperson told Bloomberg.
Related: Zimbabwe’s central bank to issue gold-backed digital currency: Report
Zimbabwe has struggled with currency volatility and inflation for over a decade. In 2009, the country adopted the USD as its currency after a period of hyperinflation rendering the local currency worthless.
The Zimbabwean dollar was reintroduced in 2019 to revive the local economy, but volatility once again occurred.
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