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The IMF has warned Zimbabwe against an initiative to issue a gold-backed digital currency

The IMF has warned Zimbabwe against an initiative to issue a gold-backed digital currency

The International Monetary Fund has warned Zimbabwe against implementing a gold-backed digital currency. This decision was taken by the government of Zimbabwe to address macroeconomic issues such as volatility in the local unit.

Source:https://www.bloomberg.com/news/articles/2023-05-09/imf-cautions-zimbabwe-against-plan-for-gold-backed-digital-money

The Reserve Bank of Zimbabwe (RBZ) began selling gold-backed digital tokens to investors on May 8, setting a minimum price of $10 for individuals and $5,000 for companies. The government hopes this will reduce demand for the US dollar, which is now replacing the local unit as the preferred currency. for transactions. Later, the token will also be used for transactions.

“A careful assessment is required to ensure that the benefits of this measure outweigh the costs and potential risks, including, for example, risks to macroeconomic and financial stability, legal and operational risks, governance risks, and the cost of lost foreign reserves,” an IMF spokesperson said.

The Washington creditor called on the authorities of the South African country to use the usual measures to solve economic problems. These measures include maintaining a tight monetary policy and accelerating the liberalization of the foreign exchange market by removing restrictions on the exchange rate at which banks, authorized dealers and businesses transact.

The Zimbabwean dollar has depreciated by 40% against the dollar this year to 1,070 on the official market and between 1,500 and 2,300 on the parallel market.

Last year, the IMF also raised questions about the Central African Republic’s approval of bitcoin as legal tender. A decision that the nation overturned a year later.

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