By Reason Razao
OPPOSITION Citizens Coalition for Change has dismissed the Reserve Bank Zimbabwe’s soon-to-be-launched gold-backed digital currency saying the economic measure lacks a sound legal framework to guide its operation.
The central bank issued a statement notifying the public of its intention to issue gold-backed digital tokens which it said will be in circulation from 8 May 2023.
The move is another attempt to stabilise the tumbling Zimbabwe dollar and offer an alternative to the US dollar after the parallel-market premiums this week breached US$1: ZWL 2 000.
According to the RBZ the gold-backed tokens will be fully backed by physical gold held by the Bank.
CCC spokesperson, Fadzayi Mahere said the introduction of the gold-backed digital tokens contravenes the Reserve Bank Act.
“What kind of “Reserve Bank” introduces a new “digital currency” with absolutely no legal framework whatsoever? What are the rules? Who made them? This move is illegal and ultra vires the Constitution and the Reserve Bank Act. No wonder the Zimbabwean Dollar is crashing,” Mahere said on Twitter.
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In a statement, the RBZ said the issuance of the gold-backed digital tokens is meant to expand the value-preserving instruments available in the economy and enhance the divisibility of the investment instruments and widen their access and usage by the public.
The first phase of the issuance of the gold-backed digital coins will be issued for investment purposes with a vesting period of 180 days and redeemable in the same way as the existing physical gold coins.
“The tokens will be available for sale, through banks, in both foreign currency and Zimbabwe dollar. Banks will create dedicated or specific accounts for the holding of the gold-backed digital tokens (e-gold wallets or e-gold cards). Holders of physical gold coins, at their discretion, will be able to exchange or convert, through the banking system, the physical gold coins into gold-backed digital tokens,” the central bank said.
The second phase will see the gold-backed digital tokens held in either e-gold wallets or e-gold cards will be tradable and capable of facilitating Person-to-Person (P2P) and Person-to- Business (P2B) transactions and settlements.
“It, therefore, means that the gold-backed digital tokens would be used both as a means of payment and a store of value.”
The pricing of the gold-backed digital tokens in foreign currency shall remain the same as the pricing model of the physical gold coins as informed or guided by the international gold price as determined by the London Bullion Market Association (LBMA) PM fix.
Payment for the gold-backed digital tokens or physical gold coins in the Zimbabwe dollar, according to the RBZ, shall remain at the current 20% margin above the willing-buyer willing-seller interbank mid-rate.