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Zimbabwe is planning to launch a digital currency this month to address the depreciation of its national currency caused by longstanding economic challenges, the Associated Press reported.
The new currency will introduce “tokens” that are supported “by physical gold held by the bank.” Zimbabweans can buy these tokens through banks and use them as a way to save money or conduct various transactions.
Reserve Bank of Zimbabwe Gov. John Mangudya said the digital currency will also ensure that people with low amounts of money can trade them “so that we leave no one and no place behind.”
The decision comes as trust in the national currency – the Zimbabwean dollar – is extremely low, with faith in the currency having plummeted since people saw their savings disappear by hyperinflation in 2008. The situation was so dire that the country issued a 100 trillion Zimbabwean dollar banknote at one point. But later the government was forced to temporarily scrap its currency and allow the US dollar to be used as legal tender.
The Zimbabwean government reintroduced the country’s currency in 2019 and banned the use of foreign currency for local transactions. However, the move was largely ignored, leading to a thriving black market and the rapid devaluation of the local currency. Officials later reversed their decision and lifted the ban on the US dollar.
To this day, many Zimbabweans opt to acquire scarce US dollars on the black market to keep at home as savings or for daily transactions. Because of the low confidence in the Zimbabwean dollar, many retailers and government institutions don’t accept the local currency.
Zimbabwe has experimented with unconventional methods to prevent the devaluation of its currency before this new measure, including the launch of gold coins as legal tender in July 2022. However, many struggling citizens have found the coins to be too expensive.