Zimbabwe sells millions of gold-backed cryptocurrencies despite IMF warning

The Reserve Bank of Zimbabwe has sold 14 billion Zimbabwean dollars worth of gold-backed cryptocurrency, worth about $39 million, despite a warning. IMF International Monetary Fund.

Also read: “Zimbabwe” introduces a digital currency backed by gold

On May 12, the Central Bank of Zimbabwe announced that it had received 135 orders, totaling Z$14.07 billion, to buy the gold-backed cryptocurrency.

The cryptocurrency, which was first introduced in April, was also backed by 139.57 kilograms of gold, with the sale continuing from May 8-12.

It is worth noting that the aforementioned currencies were sold at a price that was as low as $10 for individuals, and reached $5,000 for companies and other entities, as the minimum maturity period for the currencies was 180 days, and they could be kept in wallets. e-gold.

It is said that this step is part of an attempt to stabilize the country’s economy, and the continuous decline in the value of the local currency against the dollar, and a second round of sales of these currencies will also be held, as the bank requested submissions this week to be settled by May 18.

In turn, a conservative commented RBZ Reserve Bank, Dr. John Mangudya:

“The issuance of gold-backed currencies aims to expand the value-preserving tools available in the economy, enhance the possibility of segmenting investment tools and expand access to and use by the public.”

The move comes after the International Monetary Fund warned against the African country’s plan for a gold-backed currency, arguing that it should instead liberalize the foreign exchange market, according to a report by Bloomberg on May 9th.

A spokesperson for the International Monetary Fund said:

A careful assessment must be made to ensure that the benefits from this measure outweigh the potential costs and risks, including macroeconomic and financial stability risks, legal and operational risks, governance risks, and the cost of lost foreign exchange reserves.

Also read: Zimbabwe: Launching a platform to help migrants move money across borders

Zimbabwe has been battling currency fluctuations and inflation for more than a decade. The country adopted the US dollar as its currency in 2009, after a period of hyperinflation rendered the local currency worthless.

The Zimbabwean dollar was reintroduced in 2019 to revive the local economy, but volatility again ensued.