Banks in Zimbabwe may offer loans using the newly released gold-backed digital tokens as collateral.
(Bloomberg) — Banks in Zimbabwe may offer loans using the newly released gold-backed digital tokens as collateral.
The digital money that the central bank envisages as eventually being used in day-to-day transactions will compel lenders “to enable a third currency in their systems” in order to facilitate payments, the Bankers Association of Zimbabwe said in an emailed response to questions on Thursday.
“As the balances on gold-backed digital tokens transacting currency grows, there is potential for the banks to offer all products that are offered in Zimbabwe dollars and US dollars,” it said.
The southern African nation introduced the digital money to help tame soaring demand for US dollars in the economy as the value of the local currency plunged — it’s lost more than 50% of its value this year. The move was criticized by the International Monetary Fund, which urged the government to rather liberalize its foreign-exchange rate than risk depleting its reserves.
The central bank last week received 135 applications valued at 14 billion Zimbabwe dollar ($11 million) to buy the tokens, backed by 140 kilograms (309 pounds) of gold reserves. A second auction held Thursday sold tokens worth 71.6 kilograms of gold.
“So far it is being taken as a value preservation tool and there is a steady increase in the demand of gold-backed digital tokens,” the banking association said.
Lenders in Zimbabwe include local units of the Johannesburg-based Standard Bank Group Ltd. and Nedbank Ltd.
(Updates from fifth paragraph with amount of gold sold at Thursday auction)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.