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Nqobile Bhebhe, [email protected]

A total of 39 103 gold coins of various denominations with a cumulative value of $63,47 billion and US$0,8 million, had been sold as of March 31, 2024, with the bulk of gold coin sales (78 percent) taken up by corporates while individuals accounted for 22 percent, the Reserve Bank of Zimbabwe Governor, Dr John Mashayavanhu said.

Zimbabwe’s gold-backed digital tokens are the digital form of the country’s gold coins and derive their value from the equivalent international price of the bullion reserves held by the central bank vaults.

Introduced in May last year, the gold-backed digital tokens followed the introduction of physical gold coins six months earlier, which were highly subscribed by investors as Zimbabwe’s domestic currency suffered relentless bouts of depreciation.

Institutions and individuals have been able to buy the tokens using local or foreign currency from their banks.

The tokens have been available as an investment or store of value and were being issued to expand the value-preserving instruments available in the economy, enhance the divisibility of the investment instruments, and widen their access as well as usage by the transacting public.

Presenting this inaugural Monetary Policy Statement (MPS) last week, Dr John Mashayavanhu said the Bank continued to use value preservation instruments which included gold coins and Gold-Backed Digital Tokens (GBDTs) to manage liquidity.

Central banks across the globe, the RBZ included, use the MPS to evaluate prior period monetary policy measures and outline the monetary policy stance and policies for the subsequent six months, including the motivation for any new policies.

“A total of 39 103 gold coins of various denominations with a cumulative value of $63,47 billion and US$0,8 million, had been sold as of 31 March 2024. The bulk of gold coin sales (78 percent ) were taken up by corporates while individuals accounted for 22 percent,” Dr John Mashayavanhu said.

He added that a total of 1 624 gold coins were redeemed by customers between January 25, 2023 and March 31, 2024, of which 1 447 coins and 177 coins were for US$2,46 million and $700,4 million, respectively.

He noted that all coins which were redeemed by customers were resold to the market.

To increase the divisibility and affordability of gold coins, the bank introduced Gold-Backed Digital Tokens (GBDT) measured in milligrams, which is one hundredth of a gram.

“The Bank is currently issuing Gold-Backed Digital Tokens on tap basis. As of 31 March 2024, a cumulative total of 1 163 applications were processed, purchasing tokens valued at $466,99 billion and US$5,0 million. The cumulative total amount of gold purchased was 917 278 972 milligrams (equivalent to 917.2814 kg of gold).

“As of 31 March 2024, a total of 69,949,215 GBDT had been redeemed at a value of US$4,146 million and $1,6 billion. This represents under 10 percent of the total GBDT issued, a reflection that most of the instruments were purchased as a store of value.”

According to the MPS, the gold coins and GBDTs shall continue to be used as investment instruments and to manage liquidity in the economy to ensure a stable exchange rate.

“In this regard, the issuance of both higher and smaller denominations of gold coins will continue as an open-market-operation investment instrument for value preservation,” reads part of the report.

The gold coins and Gold-Backed Digital Tokens were introduced by the authorities to complement measures introduced by the Government where the Treasury has been implementing the value for money audits to do away with overpricing on public contracts and front-loading exchange rates.

The greedy practices resulted in companies pocketing huge sums of Zimbabwe dollar liquidity, which they offloaded on the parallel foreign exchange market, driving interest rates that fuelled inflation.