Public encouraged to fully embrace gold-backed digital currency

THE business community and the transacting public have been urged to fully embrace the gold-backed digital currency and gold coins as they are innovations brought by the Government to promote investment and store value as the benefits outweigh the risks, an economist has said.

Last week, the Reserve Bank of Zimbabwe (RBZ), injected the gold-backed digital tokens (GBDT) known as Zimbabwe Gold (ZiG) in the market as one of the means of payment for domestic transactions, over and above its value-preservation purposes.

Apart from serving as an investment instrument, ZiG is envisaged to bring additional convenience to the country’s payment systems.

The ZiG is a phase for transacting GBDT that was put in place for value preservation purposes.

ZiG is meant to be an additional payment method alongside existing payment platforms such as the Zimbabwe dollar as well as the US dollar among other currencies.

According to RBZ) ZiG will complement the local currency and foreign currency in facilitating domestic transactions in a more certain and predictable manner given the stability of the international gold price.

Lupane State University Business Clinic development manager who is also a financial market analyst Mr George Nhepera urged the market to embrace the tokens as other countries also have digital currencies.

‘We have our own digital currency backed by gold which gives it value compared to other countries where their digital currencies are not backed by gold. The market must embrace this innovation coming from the central bank as the future belongs to innovation. If the country has its innovation, the market must accept it,” he said.

Mr Nhepera said the gold-backed tokens are meant to facilitate people-to-people transactions, people-to-business transactions and business-to-business transactions thereby increasing payment options.

Announcing the introduction of the token last week, central bank governor, Dr John Mangudya said ZiG will be at par with the value of the physical Mosi-oa-Tunya gold coin and will remain informed by international gold price.

He said banks will maintain dedicated ZiG accounts and intermediate transactions in ZiG in the same way they maintain intermediate transactions in local and foreign currency.

To combat doubts that the RBZ would maintain gold reserves adequate to back the ZIGs in bank accounts, Dr Mangudya said the RBZ had enlisted the services of external auditors to validate the availability and adequacy of gold to back the ZiG at any given time, which should engender confidence among investors and the transacting public.

Initially issued through the Central Securities Depository, the tokens will be transferred using the Rapid Transfer Gross Settlement (RTGS) system in support of their newly added function as a medium of exchange.

Mr Nhepera said the coming in of gold-backed digital currency will give everyone including civil servants an opportunity to preserve their value without putting pressure on exchange rates.

“The gold coins and gold-backed digital currency will help us in the fight against inflation and also in ensuring that there is stability in the exchange rates. Once we have won the fight on inflation and exchange rate, it means there is now business confidence and international people can come into our market to purchase assets, invest in agriculture, manufacturing and other industries knowing that our exchange rates are now stable,” said Mr Nhepera. —chronicle