Zimbabwe Ignores IMF Warning, Sells Gold-Backed Crypto Tokens

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Key takeaways:

  • The first gold-backed cryptocurrency sale by the Reserve Bank of Zimbabwe has been a  spectacular success.
  • Despite a strong warning from the International Monetary Fund, Zimbabwe pressed forward with its intentions to sell gold-backed crypto tokens.

The Reserve Bank of Zimbabwe (RBZ) has achieved a significant milestone by successfully launching and selling a cryptocurrency backed by gold. This groundbreaking decision has had a profound impact on the digital financial market, serving as a crucial step towards strengthening the country’s economy.

The Reserve Bank of Zimbabwe has successfully sold gold-backed digital tokens valued at 14 billion Zimbabwean dollars, or around $39 million, despite a warning from the International Monetary Fund (IMF). The central bank reported receiving 135 requests for the purchase of the cryptocurrency backed by gold, amounting to 14.07 billion Zimbabwean dollars.

The 139.57 kilogrammes of gold backing the cryptocurrency tokens, which were first launched in April, are available for purchase from May 8 to May 12. The bank has asked for applications to be submitted this week so that they can be resolved by May 18. A second round of digital token sales will be launched.

The recent initiative by the central bank aims to provide greater financial security for Zimbabweans by allowing them to convert small amounts of their local currency into a digital gold coin, thereby safeguarding themselves against currency volatility. 

However, the International Monetary Fund (IMF) has cautioned Zimbabwe against this plan, emphasising the importance of conducting a thorough analysis to ensure that the benefits of the measure outweigh the associated costs and potential risks. These risks include macroeconomic and financial stability concerns, legal and operational risks, governance risks, as well as the cost of forgoing foreign exchange reserves.

Zimbabwe’s decision has received widespread approval from the global cryptocurrency community, as experts believe it will have a favorable effect on the country’s economy. 

Furthermore, there is speculation that the success of this endeavor may encourage other nations possessing substantial gold reserves to emulate Zimbabwe’s approach, solidifying the position of cryptocurrencies in the realm of global finance.

However, It is too early to judge how successful this project will be. As Zimbabwe enters the crypto-gold era, it offers up a slew of new options for economic revitalization. With the rest of the world watching, this audacious approach could establish an entirely novel example in the union of traditional assets and digital currency.

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Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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