Zimbabwe is debuting a gold-backed digital currency as it battles an inflation crisis.
The country’s central bank says the tokens — set to launch Monday (May 8) — will “expand the value-preserving instruments available in the economy,” the Financial Times reported.
This was in reference to a steep decline in the value of Zimbabwe dollar, which has dropped by more than half since the end of last year, falling to about 2,200 against the U.S. dollar.
The Reserve Bank of Zimbabwe says the digital tokens will be backed by gold in its reserves and can be redeemed at international prices after 180 days. But analysts have called the plan a distraction from the core causes of the country’s currency troubles, the news outlet said.
The tokens have “absolutely nothing to do with what’s happening on the ground — it is a sideshow,” economist Tinashe Murapata told the newspaper, adding that the central bank had offered few additional details on the physical gold backing for its plans.
As ordinary Zimbabweans shift away from the local currency, its decline “is the thing [the bank] should be worried about,” said Murapata.
The launch of Zimbabwe’s digital currency comes as a host of countries look to launch their own central bank digital currencies (CBDC), with various degrees of success.
In Africa, a cash shortage in Nigeria caused the country’s digital currency to become much more popular in March, when the value of eNaria transactions jumped 63% .
“The eNaira has emerged as the electronic payment channel of choice for financial inclusion and executing social interventions,” said Central Bank of Nigeria Governor Godwin Emefiele.