Despite concerns raised by the International Monetary Fund, the central bank received 135 applications, totaling 14.07 billion Zimbabwean dollars, for the purchase of these digital tokens. Launched in April, the tokens are backed by 139.57 kilograms of gold. The sale, held from May 8 to May 12, resulted in around $39 million in transactions. Individuals could acquire tokens for a minimum of $10, while corporations and other entities had a minimum purchase requirement of $5,000. The tokens come with a 180-day vesting period and can be stored in e-gold wallets or on e-gold cards.
This move by the Reserve Bank of Zimbabwe aims to stabilize the country's economy and address the depreciation of the local currency against the US dollar. It also aims to provide additional value-preserving instruments and enhance the accessibility and usage of investment instruments by the public. Following the success of the initial sale, a second round of digital token sales is scheduled, with applications being accepted until May 18.
However, the International Monetary Fund has expressed caution regarding Zimbabwe's gold-backed currency plan. The IMF suggests that the country should instead focus on liberalizing its foreign exchange market. Concerns include potential risks to macroeconomic and financial stability, legal and operational risks, governance risks, and the cost of reducing foreign exchange reserves.
Zimbabwe has faced ongoing challenges with currency volatility and inflation for over a decade. In 2009, the country abandoned its local currency due to hyperinflation and adopted the US dollar as its primary currency. However, in 2019, the Zimbabwean dollar was reintroduced in an attempt to revive the local economy, which led to renewed volatility.
The success of the gold-backed cryptocurrency sale indicates the potential for innovative solutions to address Zimbabwe's economic challenges. By utilizing the backing of gold, the Reserve Bank aims to provide stability and increase confidence in the local currency. The upcoming second round of token sales will further contribute to expanding the availability and usage of these digital assets. However, the cautionary stance from the IMF emphasizes the importance of carefully assessing the potential risks and costs associated with such measures.
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