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Zimbabwe Will Issue Gold-Backed Digital Tokens From Next Month (bloomberg.com) 28

Zimbabwe's central bank plans to sell a gold-backed digital currency to the public from May 8 in another attempt to stabilize its tumbling currency and offer an alternative to the US dollar. From a report: The tokens, to be sold through banks in local and foreign currency at a 20% margin above the interbank mid-rate, will be introduced in two phases, central bank governor John Mangudya, said in an emailed statement on Friday. The currency will initially be used for investment and then for transactions. "The issuance of the gold backed digital tokens is meant to expand the value-preserving instruments available in the economy and enhance the divisibility of the investment instruments and widen their access and usage by the public," Mangudya said. This year, Zimbabwe's local currency has declined 35% against the US dollar, which superseded it as the preferred currency for transactions. The central bank has been building gold reserves and acquiring other precious minerals since the introduction of a policy in 2022 that compels miners to pay part of their royalties in cash and metal. It's banking on the stash to help it with the latest plan.
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Zimbabwe Will Issue Gold-Backed Digital Tokens From Next Month

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  • you had me at "Zimbabwe"!

    ahahahaha

    • They'd be better off selling NFTs with "pictures" of gold bullion on them. I'd give them 1,127 Zimbabwean Dollars for one ($3.50) Tree Fiddy [youtu.be]

  • by NFN_NLN ( 633283 ) on Friday April 28, 2023 @04:09PM (#63484030)

    *If* you cannot walk into a bank and exchange your gold backed *whatever* for physical gold then it is NOT gold backed.

    Simply saying something is backed by something else and not delivering is no different than the FTX or stablecoin bullshit.

    • I'm by no means an economist, or expert, or whatever would know these things. But the whole point is not that you can get gold out of it. It's about using something, like gold that has a definite value, which can be compared to a definite value of something else. I think you could just as easily back a currency against something else, like oil, or silver, or platinum.

      So if you grow and sell apples, an unit of apples can be compared to a unit of gold in terms of value (worth). Similarly, so can bananas.

      • by NFN_NLN ( 633283 )

        The concern revolves around rampant money printing (and the resulting inflation and instability it causes).

        If money is backed by gold and you can exchange money for gold then the universe is your accountant. You can't print more money than you have gold and therefore you can't inflate away the currency.

        Pegging money to bananas or oil is the same as pegging it to tulip bulbs - you can look that up.
        Pegging money to round stones is also a disaster - you can look that up.
        You can't use oil or coal or carbon or

        • by ixuzus ( 2418046 )
          And honest accounting is the problem. As it is challenging to work out exactly how much currency is in circulation you have to to take the government's word that they haven't printed more than they have the gold to back. This being the Zimbabwe government caution is advised. If their government said the sky was blue I would send a runner to the nearest window to check. It probably works okay until the day too many people decide they want gold and much to everyone's surprise the gold has run out, confide
      • What you are describing as a medium for exchange. Gold is the medium and you measure items and services against that in gold units -- ounces.

        A gold-backed thing is a proxy. You're not actually exchanging units of metal, you're exchanging the proxy. We do this because it gives the ability to work with fractional units without scales and tools.

        But a cornerstone of a "backed" currency is the ability to exchange the proxy for the backing. That is, being able to go into a bank and change the dollars for actual g

        • a cornerstone of a "backed" currency is the ability to exchange the proxy for the backing.

          The USD is backed by politicians.

  • LOL!!! (Score:3, Funny)

    by Shad0wz ( 1950580 ) on Friday April 28, 2023 @04:11PM (#63484038)
    Nigerian Prince scam ala 2023
  • by hdyoung ( 5182939 ) on Friday April 28, 2023 @04:13PM (#63484040)
    electricity or indoor plumbing. A digital currency? Their government might as just claim to fix their economy using sorcery.
    • by taustin ( 171655 ) on Friday April 28, 2023 @04:53PM (#63484092) Homepage Journal

      Their government might as just claim to fix their economy using sorcery.

      I'm sure they've done so in the past, and will do so again in the future.

    • A lot of African countries have pretty reliable cellular service even if they don't have plumbing in a village. A cell phone has a small enough battery to charge on solar if you don't have reliable electricity. Digital banking is already pretty pervasive in a lot of those countries and for many people it's the only thing they've known. Prior to digital banking they didn't have any banking. It's actually creating more economic opportunity for a lot of people.

      But the government in Zimbabwe isn't going to b
      • That's really interesting, I hadn't thought about that. Opening banking to poor people opens the potential for credit to poor people, allowing them to invest in capital purchases. And thus build wealth.

        I'm sure someone, somehow will turn this into a scam. But at least there's a good idea in there somewhere.

    • Gold isn't worth nearly as much as albino limbs, maybe they should look into that.

  • by istartedi ( 132515 ) on Friday April 28, 2023 @04:26PM (#63484062) Journal

    The gold standards is as good as the paper it's written on. A gold standard is a special case of a "currency board". A currency board is an independent controller of the currency (not necessarily a central bank) charged with controlling the money supply, because the prior agent failed. In most (all?) cases of hyperinflation, some form of currency board helped end it, but it's not a silver bullet. It ends it because society at large trusts the board to be responsible. Let's see how this plays out, and if they can actually instill any degree of trust. It's been a long time since anybody with power there has managed to do that.

  • But fearing the worst.

    On the other hand, it is easier to lay fiber optic than water pipe, so maybe they'll find success with a gold-backed digital currency where they couldn't manage a paper-currency based economy?

  • Gold mines in Zimbabwe?

    I know there is a lot in South Africa

  • I don't believe anybody would trust the current Zimbabwe govt. They can make all sort of tall claims about their digital currency being backed by unobtainium. Most people will not want to believe any of it. It's like the FTX founder created a new digital coin and claimed it was backed by actual US dollar. Most sane people will stay away.

  • Zimbabwe's central bank plans to sell a gold-backed digital currency to the public from May 8 in another attempt to stabilize its tumbling currency and offer an alternative to the US dollar.

    Zimbabwe is suffering a crisis of confidence in their currency management and now they want to attract the attention of gold bugs?? Have they ever met any gold bugs? I don't think this is going to help...

    • Zimbabwe is suffering a crisis of confidence in their currency management and now they want to attract the attention of gold bugs?? Have they ever met any gold bugs? I don't think this is going to help...

      In fact, every gold bug has a framed Zimbabwean ten trillion dollar bill next to his gun cabinet.

      • by bn-7bc ( 909819 )
        There are gold bugs outside the US, and some places have really strict regs about owning guns, spdob't assume that every gold bug has a gun cabinet :)
  • That was the peak from a previous hyperinflation episode. I used to buy them on eBay and give them out as tips. I hope the people held on to them: they're going for over USD100 each now.

    • by bn-7bc ( 909819 )
      While I'm not a fan of the concept of tips ( an employer , in this case bar/reastaurant/taci owner/whatever), should pay their employees enugh so that they don't relay on extra income provided by your costumers. I don't mind paying more for the service/meal etc, what I object to is the expectation that I should pay n%more on top of the quoted prizes. Emploee compensation is a natter between the employee s ( or their tepresentatives ie union) and the employer as a coustumer I have no business being involved
  • A supposedly "gold-backed", centralized, digital currency issued by a government is still a... CENTRAL BANK DIGITAL CURRENCY. Also: Fractional-reserve banking, much? Read: Avoid it like the plague.
  • So... it's a digital currency... but backed by gold.... so.... if they do this, and don't allow redemption for metal, they might as well not say it's backed by gold. And if they do allow redemption, they will run out in a hurry.
  • It's notoriously easy to forge.

    Surely the Rand, Pula, Kwacha or Metical would be better choices, in the appropriate quadrants of the country. Depending on which (neighbouring, if you hadn't guessed) country you're doing trade with (or through).

    I'm sure there is some trade that goes through Harare airport to America, making the USD an appropriate "neighbour" currency for people using the international airport. But considerably more that goes overland to the neighbouring countries.

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