Banks in Zimbabwe have announced that they can issue loans based on gold-backed digital currency.
Banks in Zimbabwe can use newly released gold-backed digital tokens as collateral to enable lending.
Zimbabwe Banks Are Warm to Gold-Backed Tokens
In response to emailed questions, the Zimbabwe Bankers Association said the central bank would facilitate payments to lenders by enabling the adoption of digital currency for use in everyday transactions. “As currency transactions using gold-backed digital tokens increase, banks will have the potential to offer all products offered in Zimbabwean dollars and US dollars,” the Bankers Association explained.
Zimbabwe launched its digital currency to combat the depreciation of the local currency and contain the growing demand for the US dollar in the economy. This year, the local currency has lost more than 50 percent of its value. However, this move has led the International Monetary Fund to criticize that it should liberalize the exchange rate regime against the risk of running out of reserves.
Last week, the central bank received 135 applications worth 14 billion Zimbabwean dollars (approximately $11 million) to purchase tokens based on 140 kilograms of gold reserves. A second auction was held on Thursday, selling 71.6 kilograms of gold tokens.
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