Zimbabwe Backs New Digital Money With 140 Kilograms of Gold

(Bloomberg) — Zimbabwe used nearly 140 kilograms of gold reserves to back the first sale of its digital money.

The central bank received 135 applications valued at 14 billion Zimbabwe dollar ($12 million) to purchase the gold-backed digital tokens, it said in an emailed statement on Friday. It plans a second auction on May 18.

The southern African nation has turned to the digital money to help ease soaring demand for US dollars in its economy as the value of the local currency plunged. 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 tokens are just one of the measures introduced to shore up a currency that’s weakened more than 40% against the US dollar this year, and amid soaring inflation. It’s also released gold coins and on Thursday warned that short-term interest rates may have to rise. The central bank’s benchmark rate at 140% is the highest in world.

©2023 Bloomberg L.P.

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