The Reserve Bank of Zimbabwe (RBZ) of Zimbabwe has said the gold-backed digital tokens will start operating as a medium of exchange for domestic transactions at the end of next month.
The gold-backed digital tokens are Zimbabwe’s own commodity-backed version of Central Bank digital currency (CBDC).
<a href="https://www.businessweekly.co.zw/rbz-digital-gold-token-transacting-in-a-month/">Business Weekly</a> reported RBZ governor, John Mangudya, as saying the gold-backed digital tokens were an investment product and will also be used for transaction purposes.
They will be in units of milligrammes.
A gramme of gold, which has a current average international spot price of US$63, is equivalent to 1 000 milligrammes.
Mangudya said is the RBZ working with banks and formal retailers, among other stakeholders, in the integration of systems to be used for transacting using the gold-backed digital tokens. He said:
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The next stage now is to open bank accounts for those who have already purchased these tokens.
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Mangudya said the holders of the digital token will get swipe cards from banks, which they can use to transact with any registered trader like supermarkets. He said:
<blockquote>
They are going to complement the existing currency framework whereby, itself not being a (traditional) currency, but you can transact using that gold token and can keep it as a store of value…
We are saying our CBDC, our central bank digital currency, is going to be on the basis of our gold.
In other words, our CBDC is backed by gold. It means we cannot just have more tokens other than the equivalent of gold we are holding in store.
If you look at cryptocurrency products; they are not currencies but an investment. So, this (gold-backed digital token) is an investment.
But (by comparison) cryptocurrencies, in most cases, are not backed by anything.
That is why they are not in the sphere of central banking; they (cryptocurrencies) are not regulated by central banks.
Whereas for our gold, it is we (the central bank) who keep it. So, what we are saying is that we need a cryptocurrency of some nature called CBDC, which is backed by reserves.
The reserves are either gold or foreign currency.
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More: <a href="https://www.pindula.co.zw/">Pindula News</a>

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Use Of RBZ Digital Gold Tokens For Transactions Set To Start In A Month

An economist at Lupane State University (LSU) has urged the Government to explore the feasibility of paying a portion of civil servants’ salaries in gold-backed digital tokens and gold coins.
Speaking to the <a href="https://www.chronicle.co.zw/consider-paying-civil-servants-in-gold-coins/">Chronicle</a>, LSU business clinic development manager and economist George Nhepera said paying civil servants in gold coins and gold-backed digital currency reduces the dominance of the black market as the instruments are an alternative store of value other than the US dollar. Said Nhepera:
<blockquote>
To this end, they should be promoted in terms of their use for both people-to-people (P2P) transactions, people-to-business (P2B), and business-to-business (B2B).
Once this has been achieved with full market confidence, surely our Government can take a giant step to include a portion, say 50 percent of the civil servant salaries and benefits, be paid in these innovative instruments.
This strategy will help to curtail the black-market dominance in our market which is not helpful for the economic growth and poverty alleviation of our country let alone the achievement of our Vision 2030.
The future therefore belongs to innovators hence our monetary authorities are walking the talk in that space and they should be commended for supporting the Government in that respect.
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However, economic analyst Morris Mpala argued that paying civil servants in the gold-backed currency will reduce the demand for the Zimbabwe dollar. He said:
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This again defeats the purpose of encouraging the use of local currency by the populace. Noble as it might be in terms of liquidity management it shouldn’t be encouraged.
Let’s pay civil servants the right remuneration and let them have a choice in how they save their money and we concentrate on making the fundamentals right for everyone.
</blockquote>
On Tuesday, 11 July, the Government announced it has increased civil servants’ forex and local currency salary components with immediate effect.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Govt Urged To Consider Paying Civil Servants In Gold Coins

Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya said that gold-backed digital tokens that were introduced last week are working well as 140 kilogrammes of the tokens valued at more than ZWL$14 billion were taken up by the market.
The central bank says it has sold 31 866 Mosi-oa-Tunya gold coins since their introduction last year for ZWL$25.8 billion.
Mangudya told <a href="https://www.sundaymail.co.zw/rbz-confident-of-price-stability">The Sunday Mail</a> that the huge demand for gold coins and digital tokens could help remove excess liquidity and stabilise the Zimbabwe dollar. He said:
<blockquote>
The purpose of digital gold tokens, just like the physical gold coins, is to store value, act as an investment tool and mop up excess liquidity from the market.
The reason the parallel market exchange rate goes up is that we are a dual-currency economy.
In a dual-currency economy, where there is a local currency and the US dollar, many will obviously find the US dollar as the most attractive.
By providing digital gold tokens, we are saying do not go to the parallel market, but store value in the coins and tokens, which are known worldwide as a store of value.
Therefore, it is working very well, because the demand for the gold coins is higher than the supply, while the electronic version is actually working very well.
About $14 billion was used to purchase digital gold tokens.
That money could have gone into the parallel market but was not channeled there and was used to buy digital gold tokens. So, it is working.
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The gold tokens are being introduced in two phases.
The first phase entails issuing gold tokens with a vesting period of 180 days for investment purposes.
The second phase involves issuing gold-backed digital tokens held in either e-gold wallets or e-gold cards being tradable and capable of facilitating person-to-person transactions.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Digital Gold Tokens Working Well - Mangudya

The Reserve Bank of Zimbabwe (RBZ) said it will start selling gold-backed digital tokens on Monday, 08 May 2023.
Individuals and institutions intending to buy the digital tokens can get the application forms from the RBZ, commercial banks, building societies and the People’s Own Savings Bank (POSB).
Completed application forms should be submitted through Commercial Banks, Building Societies and the POSB.
The offer opens on Monday, 8 May 2023 at 0800 hours and closes on Wednesday, 10 May 2023 at 1200 hours.
The payment date is Thursday, 11 May 2023, and the Gold-Backed Digital Tokens will be issued on Friday, 12 May 2023. Said the RBZ:
<blockquote>
The digital tokens will be issued for investment purposes with a vesting period of 180 days and redeemable in the same way as the existing physical gold coins.
The digital tokens will be available for sale, through banks, in both foreign and local currency.
Banks will create dedicated or specific accounts for the holding of the gold-backed digital tokens (e-gold wallets or e-gold cards).
Holders of physical gold coins, at their discretion, will be able to exchange or convert, through the banking system, the physical gold coins into gold-backed digital tokens.
</blockquote>
The central bank also said the old-backed digital tokens will be used as a means of payment and a store of value. It said:
<blockquote>
The digital tokens held in either e-gold wallets or e-gold cards will be tradable and capable of facilitating Person-to-Person (P2P) and Person-to-Business (P2B) transactions and settlement.
It, therefore, means that the gold-backed digital tokens would be used both as a means of payment and a store of value.
</blockquote>
In terms of pricing of the tokens in foreign currency, the RBZ said it shall remain the same as the pricing model of the physical gold coins as informed or guided by the international gold price as determined by the London Bullion Market Association (LBMA) PM fix.
The LBMA Gold Price is the internationally recognised benchmark price for gold delivered in London 
Set twice daily (at 10:30 and 15:00 London UK time) in US dollars per troy ounce.
The RBZ said the payment for the digital tokens or physical gold coins in local currency shall be at a 20% margin above the willing-buyer willing-seller interbank mid-rate.
Applications for digital tokens will be through banks, building societies and the POSB and must be for a minimum of US$10 and US$5 000 for individuals and corporates and other entities (including financial institutions), respectively.
The central bank said it reserves the right to accept or reject any application or part made by individuals and corporates and other entities.
It said the full payment for allotted digital tokens shall be made on the settlement date through the normal payment systems.
However, individuals and entities cannot use borrowings to finance the purchase of the digital tokens.
The RBZ said the Financial Intelligence Unit shall take appropriate action in respect of any suspicious sources of funding.
The digital tokens will be issued in milligrammes, which is one-thousandth of a gramme, through the custodian banks within the Central Securities Depository payment system.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Buying RBZ's Gold-Backed Digital Tokens; Here Is What You Need To Know

Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya said that the digital gold tokens will assist in stabilising the Zimbabwe dollar by acting as an alternative store of value and helping facilitate transactions for ordinary people.
The central bank is set to release the digital gold tokens on Monday, 08 May.
Speaking to <a href="https://www.sundaymail.co.zw/digital-gold-tokens-out-tomorrow">The Sunday Mail</a>, Mangudya said the decline in value of the local currency is being driven by “unlimited demand” for the US dollar.
He said the digital gold tokens will complement the Mosi-oa-Tunya gold coins in mopping up excess liquidity in the market. Mangudya said:
<blockquote>
The tokens function in the same way as the physical gold coins and will work in parallel with the physical gold coins introduced last year to mop up excess liquidity, reduce demand for the US dollar as a store of value and stop the depreciation of the local currency.
</blockquote>
He said the digital tokens will be issued in milligrammes, and will be available for sale at banks in both foreign and local currency, with specific accounts such as e-gold wallets or e-gold cards for holding the assets. Added Mangudya:
<blockquote>
The purpose is threefold, as it seeks to save, invest and be for transacting purposes, with one having the option to buy the digital gold coins in foreign currency or in local currency.
The digital gold tokens have the same characteristics as the physical gold coins; the vesting period of 180 days is the same and will act as a store of value, among other things.
However, the beauty of digital gold tokens is the issue of visibility and also in terms of financial inclusion. 
Anyone can buy them. We are talking of 1000 milligramme which is valued at 6 cents.
There was an outcry on the exclusivity on gold coins, with some saying they can only be accessed by a few, so with digital gold tokens, they will be accessible to everyone.
</blockquote>
Last week the RBZ said applications of tokens will be accessible from banks for a minimum of US$10 for individuals and US$5 000 for financial institutions, corporates and other entities.
Payment for digital tokens or physical gold coins in local currency shall be at a 20 percent margin above the willing-buyer, willing-seller interbank mid-rate.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

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