Foreign media: Zimbabwe launches a digital currency linked to gold

Reported by Reference News Network on May 25thAccording to a recent report by the Buenos Aires Economic News Network in Argentina, Zimbabwe launched a digital currency linked to the price of gold earlier this month. By doing so, the central bank hopes to curb the hyperinflation ravaging the country.

Starting from May 8th, enterprises will be able to use this digital currency for payments and savings. Subsequently, it will be open to individuals.

The report states that in a country where Bitcoin is already widely used, this is an attractive solution. Bitcoin has replaced the US dollar, which, although secure, is now difficult to obtain.

Last year, when the inflation rate was close to 200%, the central bank introduced a gold coin, hoping to prevent the Zimbabwean dollar from falling and ease the shortage of dollars. Some wealthy individuals, especially businessmen, purchase these coins to protect their asset value. The inflation rate has now decreased by more than half, but it is still a real problem. According to official data, the country's inflation rate is currently 87%.

At present, the price of gold is above $2000 per ounce, at a historical high. Because gold is much more stable than bitcoin, this digital currency seems more secure. Zimbabwe has a huge advantage: as a gold producing country, it does not need to import gold to issue this new currency.

Economists are skeptical about the true power of this new digital currency. They are worried about its convertibility with the Zimbabwean dollar. Indeed, the Zimbabwean dollar reissued in 2019 was a failed currency and was rejected by businesses and even some government offices. Currently, there is a double difference in the US dollar exchange rate between the official market and the black market in Zimbabwe. (Compiled by Li Zijian)