{"id":8980,"date":"2023-05-15T13:17:50","date_gmt":"2023-05-15T17:17:50","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/zimbabwe-is-launching-gold-backed-digital-tokens-what-you-need-to-know\/"},"modified":"2023-05-15T13:17:50","modified_gmt":"2023-05-15T17:17:50","slug":"zimbabwe-is-launching-gold-backed-digital-tokens-what-you-need-to-know","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=8980","title":{"rendered":"Zimbabwe is launching gold-backed digital tokens: What you need to know"},"content":{"rendered":"
\n

Zimbabwe is looking to gold to \u201cexpand value-preserving instruments,\u201d launching a gold-backed digital currency last week as the nation suffers from hyperinflation and its currency continues to diminish in value.<\/p>\n

The move is an \u201cinteresting experiment to see if locals will warm up to a more stable currency and trust the nation\u2019s central bank in its endeavors,\u201d Peter Spina, president of GoldSeek.com, told MarketWatch.<\/p>\n

\n

The Reserve Bank of Zimbabwe said it was issuing the gold-backed digital tokens in a move to \u201cexpand value-preserving instruments\u201d available in the nation\u2019s economy, as well as \u201cenhance the divisibility of the investment instruments and widen their access and usage by the public.\u201d <\/p>\n

\u201cA gold-backed currency, whether digital or not, is something that was once thought to be out of the question,\u201d said Brien Lundin, editor of Gold Newsletter. \u201cBut as the fiat money experiment, which has essentially been in place since 1971, has progressed along the predictable path, the idea of backing currencies with gold will increasingly be discussed.\u201d<\/p>\n

The offering<\/h2>\n

The tokens are meant for investment purposes, with a vesting period of 180 days \u2014 available for sale at banks for purchase with local or foreign currency and redeemable in the same way as existing physical gold coin. <\/p>\n

Reserve Bank of Zimbabwe Gov. John Mangudya said the digital tokens would be fully backed by physical gold held by the bank, according to an April 28 Associated Press report. He also said the tokens could be used as a way for people to save money or conduct \u201cperson-to person and person-to-business transactions and settlements.\u201d <\/p>\n

News reports, including one from Business Insider Africa, said the first sale of the digital currency was backed by nearly 140 kilograms, or roughly 4,938 ounces, of gold reserves. On Friday, the June gold futures contract
\n GC00,
\n +0.21%<\/bg-quote><\/p>\n

GCM23,
\n +0.21%<\/bg-quote>
\n settled at $2,019.80 an ounce on Comex. On Thursday of last week, futures prices settled at $2,055.70, the second-highest finish on record for a most-active contract. <\/p>\n

The 140 kilograms of gold would be valued at around $9 million to $10 million, said Spina. That\u2019s \u201cpeanuts in the grand scheme of things.\u201d<\/p>\n

Attempt to gain trust<\/h2>\n

The move serves as a reminder of a time when some currencies were backed by a fixed quantity of gold \u2014 a monetary system known as the gold standard.<\/p>\n

However, Steve H. Hanke, a professor of applied economics at The Johns Hopkins University, told MarketWatch the \u201cso-called gold-backed digital currency is yet another scam being offered up by the Reserve Bank of Zimbabwe and the local mafia that flies under the flag of ZANU-PF,\u201d the nation\u2019s dominant political party.<\/p>\n

\u201cAnyone asserting that Zimbabwe\u2019s gold-backed digital currency will herald the return of a global gold standard is delusional,\u201d said Hanke, who says he\u2019s known as the \u201cMoney Doctor\u201d in Zimbabwe, having accurately measured the two hyperinflations that have occurred in the country since 2007.<\/p>\n

Hanke pointed out that if you hold these tokens, \u201cyou can\u2019t even sell them for six months,\u201d given the 180-day vesting period.<\/p>\n

Zimbabwe had introduced gold coins into the market as a store of value \u2014 for sale to the public in late July of last year. However, despite that, \u201cmoney supply growth continues to grow with real inflation rates about 400%,\u201d said GoldSeek.com\u2019s Spina.<\/p>\n

Gold is supposed to be about \u201creturning trust to a currency or system that has lost trust,\u201d he said. \u201cEven with this power, [gold] will not be enough for locals to gain trust in the central bank\u2019s digital currency experiment.\u201d <\/p>\n

\u201cIt may attract some interest, but it\u2019s objective is to rebuild trust and mop up excess liquidity in the system. This will not be enough to fix this serious problem,\u201d said Spina. <\/p>\n

\u2018Full faith and credit\u2019<\/h2>\n

Edmund Moy, former director of the U.S. Mint and senior IRA strategist for gold and silver dealer U.S.\u00a0Money\u00a0Reserve, said that digital currency, even partially gold backed, might be more efficient, but it still comes down to \u2018full faith and credit,\u2019 and the even larger policy issue is \u201cthis is likely part of the global de-dollarization efforts.\u201d<\/p>\n

Central banks in other nations, such as the Bahamas and Nigeria, have already launched central bank digital currencies. <\/p>\n

There may be more countries taking the route of gold-backed digital currencies, said Spina. \u201cCountries facing a run on dollar reserves will see this as an option to stabilize their currencies.\u201d<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Zimbabwe is looking to gold to \u201cexpand value-preserving instruments,\u201d launching a gold-backed digital currency last week as the nation suffers from hyperinflation and its currency continues to diminish in value. The move is an \u201cinteresting experiment to see if locals will warm up to a more stable currency and trust the nation\u2019s central bank in […]<\/p>\n","protected":false},"author":1,"featured_media":8981,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-8980","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nZimbabwe is launching gold-backed digital tokens: What you need to know | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Zimbabwe is looking to gold to \u201cexpand value-preserving instruments,\u201d launching a gold-backed digital currency last week as the nation suffers from\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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