The Reserve Bank of Zimbabwe (RBZ) announced yesterday that as one of its many initiatives to salvage the plummeting local currency, it would begin issuing digital tokens backed by gold on May 8.

Gold coins were launched in July of last year as part of a number of economic steps to reduce demand for dollars, stable the Zimbabwe dollar exchange rate, and rein in surging inflation.

But the gold coins have done little to save the local currency that is trading at $1 to $2 100 on the parallel market compared to $1 036 on the official auction market.

“The gold-backed tokens will be fully backed by physical gold held by the bank. As previously advised, the issuance is meant to expand the value-preserving instruments available in the economy and enhance divisibility of the investment instruments and widen their access and usage by the public,” RBZ governor John Mangudya said in a statement after a sitting of the Monetary Policy Committee (MPC) on March 28.

“Gold-backed 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 tokens will be available for sale through banks in both foreign currency and Zimbabwean dollar.

“Banks will create specific or dedicated accounts for the holding of 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.”

He added: “The gold-backed digital tokens held in either e-gold or gold cards will be tradable and capable of facilitating person-to-person and person to business transactions and settlements. It therefore means that the gold-backed do tokens would be used both as a means of payment and a store of value.

“Payment for the gold-backed digital tokens or physical gold coins in Zimbabwean dollar shall remain at the current 20% margin above the willing-buyer willing-seller interbank midrate.”