The Sunday News
Harare Bureau
DIGITAL gold tokens set to be released by the central bank tomorrow will assist in stabilising the local currency through acting as a viable alternative store of value and helping facilitate transactions for ordinary people, Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya has said.
The local currency has been losing value against the US dollar on the parallel market in the past month, a development that has had the adverse impact of pushing up prices of basic commodities. The RBZ believes that the decline in value of the local unit is being driven by “unlimited demand” for the US dollar. However, the digital gold tokens are expected to complement Mosi-oa-Tunya gold coins in mopping up excess liquidity in the market.
“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 depreciation of the local currency,” Dr Mangudya told our Harare Bureau.
Dr John Mangudya
The digital tokens, which will be issued in milligrams, will be available for sale at banks in both foreign and local currency, with dedicated or specific accounts such as e-gold wallets or e-gold cards for holding the assets. Dr Mangudya also expects the tokens to help Government’s drive to promote financial inclusion.
“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 the digital gold tokens is the issue of visibility and also in terms of financial inclusion. Anyone can buy them.
We are talking of 1 000 milligrammes 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,” he said.
Economist and member of the RBZ Monetary Policy Committee Mr Persistence Gwanyanya said gold was the only commodity that could compete with the US dollar as a store of value.
“At the moment, there is no other commodity or asset other than gold that can compete with the US dollar. This is probably why RBZ has opted for gold instruments, starting with the gold coins and now digital tokens,” he said.
Digital gold tokens, he said, can be used to transact goods and services of any amount, thereby giving them a competitive advantage over the US dollar.
In a statement last week, 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. Pricing in foreign currency will remain the same as the pricing model for the physical gold coins. Payment for the 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. Monetary authorities introduced Mosi-oa-Tunya gold coins in July last year. This was followed by the release of smaller denomination gold coins in November. As of March 2023, over $26 billion worth of gold coins had been sold.
