“Zimbabwe Launches Gold-Backed Cryptocurrency as Alternative to Collapsed Local Currency”

2023-05-08 07:53:48

In this southern African country where the local currency has collapsed, you can now pay in golden digital tokens using an e-gold card or save with a gold e-suitcase. A possibility open from May 8 to companies – from 5 000 dollars invested – then subsequently to individuals for a minimum amount of ten dollars. A tempting proposition in a country where bitcoin is already very popular. It replaced the national currency, or the dollar, a safe currency, but which remains difficult to obtain.

Last year, when inflation flirted with 200%, the governor of the Central Bank introduced gold coins in hopes of stemming the fall of the Zimbabwean dollar and making up for the lack of US dollars. The richest, and especially entrepreneurs, then buy these coins to protect the value of their assets. Inflation is now half as high, but it remains a real problem, it is at 87% according to the official rate.

A currency within everyone’s reach

Gold-backed cryptocurrency is something of an extension that aims to be both safe and popular. At 1 800 dollars each, the coins put into circulation last July were reserved for the richest. The smallest division of this new token will cost about six cents. It is therefore a currency within everyone’s reach that starts today. The launch of a gold crypto also confirms the return to grace of the barbaric icon. It is one of the oldest reserve values, used since ancient times in Egypt.

In the turbulent times we are currently experiencing, everyone is rushing for gold. Its price is currently hovering above the 2 mark. 000 dollars an ounce, a historically high level. The price of gold being much more stable than that of bitcoin, this digital currency appears to be more secure. It is on this wave that Zimbabwe is surfing. With a major advantage : it is a gold producer, so it does not need to import to create its new currency.

The failure of the Zimbabwean dollar

Economists are skeptical about the real powers of this new digital currency. Its convertibility into the Zimbabwean dollar worries them. It is true that this Zimbabwean dollar reintroduced in 2019 is a failure, a currency hated by citizens and not very credible. It is refused by merchants and even in certain public administrations. Today at the official market, it takes 1 000 units of this southern dollar to obtain a US dollar. On the black market, it’s twice as much.

► To read also: Al Jazeera reveals how gold is used to launder money in Zimbabwe

Will this new high-tech currency that shines like gold be Zimbabwe’s new money? ? It has the color of silver, but it is not quite silver given the opacity that surrounds it, warn these experts. More like a 2.0 smokescreen hiding the good old printing press. With the presidential election scheduled for July, it is running at full speed, denounce the economists, which accentuates a little more the rout of the local currency.

More than 10 years of inflation

It is therefore not certain that this new digital currency will quickly gain the trust of users. The memory of the economies that went up in smoke during the hyper inflation of 2008 and 2009 is still too stinging for Zimbabweans to easily believe in the value of surrogates.

For more than ten years, Zimbabwe has literally been drowned by double and sometimes even triple digit inflation. President Emmerson Mnangagwa promised to make his country a middle-income economy by 2030. But since taking office he has been unable to restore confidence in the local currency. Uncle Sam’s currency is still that of Zimbabwe’s real economy. It is for example in US dollars that tobacco is paid for right now to farmers.

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