Zimbabwe Sells Millions of Gold-backed Crypto Tokens, Shrugs off IMF Advice

Zimbabwe ignored the International Monetary Fund’s (IMF) caution and engaged in the sale of its gold-backed crypto tokens. As a result, the Reserve Bank of Zimbabwe recorded huge success selling its gold-backed digital assets worth 14 billion in its native currency or 39 million in United States dollars.

According to an announcement, Zimbabwe’s central bank acknowledged receiving 135 applications for buying its gold-backed crypto assets. While the cumulative application for the newly launched tokens is about 14.07 billion Zimbabwean dollars.  

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The Zimbabwean apex bank launched the asset in April and made it available for purchase from May 8 to May 12. The digital tokens were backed by 139.57 kilograms of gold, and investors can store them on e-gold cards or electronic gold wallets.

Further, the bank set the token’s minimum vesting period of 180 days. Also, it set minimum purchasing amount levels of $10 and $5,000 for individuals and companies, respectively.

According to XE.com, the official exchange rate for the Zimbabwean dollar is 362 ZWD to 1 USD. However, the actual value is higher on the street.

The Zimbabwean central bank made this bold step with its gold-backed digital as part of its plans to stabilize the country’s economy. It plans to reverse the declining value of its fiat currency against the USD.

Following the success of the initial sales of the digital token, the central bank is gearing toward another sale round. The bank requested that interested investors submit applications by May 18 for settlement.

The Reserve Bank of Zimbabwe governor, Dr. John Mangudya, explained the importance of the newly launched tokens through a local news outlet. 

Mangudya mentioned that issuing gold-backed assets will expand the availability of value-preserving instruments in the economy. Also, the tokens will improve the public’s access to and use of investment products.

The move to sell its gold-back crypto tokens came shortly after the International Monetary Fund (IMF) cautioned it. According to a report from Bloomberg, the IMF warned Zimbabwe against its plan with gold-backed crypto assets.

An IMF spokesperson stated that the country should carefully assess to ascertain that the token’s benefits outweigh the potential risks. Some highlighted risks include legal and operational risks, macroeconomic and financial stability risks, and governance risks.

The IMF also advised Zimbabwe to take alternative measures to stabilize its economy, such as advancing its foreign exchange market.

Also, it suggested that the country could explore tight monetary policies and the removal of exchange rates on transactions for banks, authorized financial dealers, and businesses. However, time will tell if IMF’s caution against risks will become a reality.

Featured image from Pixabay and chart from Tradingview.com