HARARE, Zimbabwe (AP) \u2014 Zimbabwe will launch a digital currency next month by introducing \u201ctokens\u201d that are backed by gold reserves and can be transferred between people and businesses as a form of payment, the country\u2019s central bank said Friday.<\/p>\n\n\n\n
The move is aimed at shoring up\u00a0Zimbabwe\u2019s faltering national currency, the Zimbabwe dollar, which is fast depreciating amid yearslong economic woes in the southern African nation.<\/p>\n\n\n\n
The Bahamas, Jamaica and\u00a0Nigeria have already launched digital currencies\u00a0backed by their central banks, with several other countries, including China, running trial projects.\u00a0The United Kingdom is moving closer\u00a0to it by asking for public input on the idea. The U.S. and European Union are considering similar moves.<\/p>\n\n\n\n
In Zimbabwe, the new tokens \u201cwill be fully backed by physical gold held by the bank\u201d and will go into circulation on May 8, Reserve Bank of Zimbabwe Gov. John Mangudya said. People can buy the tokens and use them as a way to save their money or conduct \u201cperson-to-person and person-to-business transactions and settlements,\u201d Mangudya said.<\/p>\n\n\n\n
People will be able to buy the tokens through banks and make transactions using \u201ce-gold wallets or e-gold cards\u201d held by banks, he said.<\/p>\n\n\n\n
Trust in Zimbabwe\u2019s currency is desperately low after people in 2008 had their savings\u00a0wiped out by hyperinflation, which reached 5 billion percent, according to the International Monetary Fund, nearly a world record.<\/p>\n\n\n\n
The hyperinflation resulted in the country at one point issuing a 100 trillion Zimbabwe dollars banknote before the government was forced to temporarily scrap its currency and allow the U.S. dollar to be used as legal tender.<\/p>\n\n\n\n
In 2019, the government reintroduced a Zimbabwean currency and banned foreign currencies for local transactions. But few took heed and the black market thrived, while the local currency quickly devalued. The government relented and unbanned the U.S. dollar.<\/p>\n\n\n\n
With memories of that disastrous inflation, many people today prefer to seek scarce U.S. dollars on the illegal market to keep at home as savings or for daily transactions, where U.S. currency is still used. Faith in the Zimbabwe dollar is so low that many retailers and even some government institutions don\u2019t accept it.<\/p>\n\n\n\n
On the official market, the exchange rate is just over 1,000 Zimbabwe dollars to the U.S. dollar. However, it\u2019s about double that amount of local currency on the illegal \u2014 but flourishing \u2014 street market, where greenbacks are readily available.<\/p>\n\n\n\n
Zimbabwe has tried to stave off the depreciation of its currency with unusual ideas before. In July 2022, it\u00a0launched gold coins as legal tender\u00a0to stabilize the local currency. But many people struggling to buy everyday basics such as bread found them too pricey.<\/p>\n\n\n\n
The introduction of the digital currency will ensure that \u201cthose with low amounts\u201d of money can trade them \u201cso that we leave no one and no place behind,\u201d Mangudya told Zimbabwe\u2019s The Sunday Mail newspaper last weekend.<\/p>\n\n\n\n
International gold prices determined by the London Bullion Market Association will dictate the local pricing of the tokens, Mangudya said.<\/p>\n\n\n\n
More than 80% of the world\u2019s central banks are considering issuing digital currencies or have already done so, the consultancy PwC said in a report last year.<\/p>\n\n\n\n