The Reserve Bank of Zimbabwe (RBZ), the southern African country's central bank,
has announced that
it would issue a gold-backed digital currency to serve as legal tender in the country.
The move will aim to stabilize the local currency from continued value decrease against the U.S. dollar (USD).
The new digital currency will allow Zimbabweans with low amounts of local currency to buy gold units to protect themselves from volatility by exchanging their Zimbabwean dollars for the
digital gold token.
The country has been struggling with the volatility in the local currency and high
inflation
rates for over a decade.
In March, Zimbabwe's annual
consumer price index
(CPI) was announced as 87.6%, down from 92% in the previous month.
The economic volatility in the country even caused some businesses to print their own money with handwritten papers that allow holders to use as a payment method for future
purchases.
RBZ Governor John Mangudya said they expect the exchange rate to stabilize after tobacco farmers receive their USD payments in the upcoming weeks.
Zimbabwe abandoned its currency by adopting the dollar in 2009 to fight against
hyperinflation
.
The Zimbabwean dollar (ZWL) currently trades at 1,001 ZWL against $1, though it is generally exchanged for 1,750 ZWL on the streets.
Several Texas lawmakers in the U.S.
also recently proposed
two bills to create a state digital currency backed by gold instead of the USD.
