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Zimbabwe plans to launch digital currency backed by gold

  By Farai Mutsaka | AP
  April 28, 2023 at 11:36 a.m. EDT
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  HARARE, Zimbabwe — Zimbabwe will launch a digital currency next month
  by introducing “tokens” that are backed by gold reserves and can be
  transferred between people and businesses as a form of payment, the
  country’s central bank said Friday.
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  The move is aimed at shoring up [19]Zimbabwe's faltering national
  currency, the Zimbabwe dollar, which is fast depreciating amid
  yearslong economic woes in the southern African nation.

  The Bahamas, Jamaica and [20]Nigeria have already launched digital
  currencies backed by their central banks, with several other countries,
  including China, running trial projects. [21]The United Kingdom is
  moving closer to it by asking for public input on the idea. The U.S.
  and European Union are considering similar moves.

  In Zimbabwe, the new tokens “will be fully backed by physical gold held
  by the bank” and will go into circulation on May 8, Reserve Bank of
  Zimbabwe Gov. John Mangudya said. People can buy the tokens and use
  them as a way to save their money or conduct “person-to-person and
  person-to-business transactions and settlements,” Mangudya said.
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  People will be able to buy the tokens through banks and make
  transactions using “e-gold wallets or e-gold cards” held by banks, he
  said.

  Trust in Zimbabwe’s currency is desperately low after people in 2008
  had their savings [22]wiped out by hyperinflation, which reached 5
  billion percent, according to the International Monetary Fund, nearly a
  world record.

  The hyperinflation resulted in the country at one point issuing a 100
  trillion Zimbabwe dollars banknote before the government was forced to
  temporarily scrap its currency and allow the U.S. dollar to be used as
  legal tender.

  In 2019, the government reintroduced a Zimbabwean currency and banned
  foreign currencies for local transactions. But few took heed and the
  black market thrived, while the local currency quickly devalued. The
  government relented and unbanned the U.S. dollar.
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  With memories of that disastrous inflation, many people today prefer to
  seek scarce U.S. dollars on the illegal market to keep at home as
  savings or for daily transactions, where U.S. currency is still used.
  Faith in the Zimbabwe dollar is so low that many retailers and even
  some government institutions don’t accept it.

  On the official market, the exchange rate is just over 1,000 Zimbabwe
  dollars to the U.S. dollar. However, it’s about double that amount of
  local currency on the illegal — but flourishing — street market, where
  greenbacks are readily available.

  Zimbabwe has tried to stave off the depreciation of its currency with
  unusual ideas before. In July 2022, it [23]launched gold coins as legal
  tender to stabilize the local currency. But many people struggling to
  buy everyday basics such as bread found them too pricey.
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  The introduction of the digital currency will ensure that “those with
  low amounts” of money can trade them “so that we leave no one and no
  place behind,” Mangudya told Zimbabwe’s The Sunday Mail newspaper last
  weekend.

  International gold prices determined by the London Bullion Market
  Association will dictate the local pricing of the tokens, Mangudya
  said.

  More than 80% of the world’s central banks are considering issuing
  digital currencies or have already done so, the consultancy PwC said in
  a report last year.
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