In a bid to tackle the country’s long-standing economic woes, Zimbabwe is planning to introduce a digital currency backed by gold reserves worth $100 million. This move is aimed at addressing the country’s persistent currency instability and the high demand for foreign currencies.

Zimbabwe has been struggling with economic instability for years, with hyperinflation and a severe shortage of foreign currency hampering its growth. The government has been exploring various solutions to address these issues, including the introduction of a new currency and the promotion of digital payments.

The country’s central bank, the Reserve Bank of Zimbabwe (RBZ), has announced that it plans to introduce a digital currency backed by gold reserves held at Fidelity Printers and Refiners. The RBZ is Zimbabwe’s sole gold buyer, and Fidelity Printers and Refiners is its gold refining unit.

According to the RBZ, the digital currency, which will be called “e-Gold,” will be launched in the coming months. The e-Gold will be backed by a $100 million gold reserve, which will be held in a secure vault in the country.

The RBZ governor, John Mangudya, said that the e-Gold would be used for transactions between individuals and merchants, as well as for international remittances. The digital currency would also help Zimbabwe to increase its gold exports, as foreign buyers could purchase the e-Gold and convert it into physical gold.

Mangudya added that the e-Gold would be regulated by the RBZ and would be subject to anti-money laundering and anti-terrorism financing laws.

The RBZ’s move to introduce a digital currency backed by gold is not unique. Other countries, including China and Russia, have also been exploring the use of digital currencies backed by precious metals. However, Zimbabwe’s plan is notable because of the country’s difficult economic situation.

While the plan has received some support, others have raised concerns about the RBZ’s ability to manage the e-Gold effectively. Zimbabwe has a history of corruption and mismanagement, and some fear that the digital currency could be subject to similar problems.

Critics have also pointed out that the $100 million gold reserve may not be sufficient to back the e-Gold in the long term, given the country’s high inflation rate and currency instability.

Furthermore, there are concerns about the impact of the e-Gold on Zimbabwe’s existing financial system. Some experts warn that the digital currency could undermine the country’s already fragile banking system, as people might switch to the e-Gold to avoid holding Zimbabwean dollars.

Despite these concerns, the RBZ remains optimistic about the e-Gold’s potential to boost the country’s economy. The digital currency is expected to increase the use of digital payments, reduce the reliance on foreign currencies, and help Zimbabwe to expand its gold exports.

In conclusion, Zimbabwe’s plan to introduce a digital currency backed by gold reserves worth $100 million is a bold move that could potentially address the country’s long-standing economic problems. However, the success of the e-Gold will depend on the RBZ’s ability to manage it effectively, and its impact on Zimbabwe’s financial system remains to be seen.