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IMF Chastises African State for Adopting a Non-conventional Currency Management Approach

  • 2 min read

The International Monetary Fund (IMF) has called on Zimbabwean monetary authorities to carefully consider the benefits of issuing a gold-backed digital currency versus the potential risks to the economy. Instead of rushing to issue the gold tokens, the global lender said authorities should instead consider liberalizing the country’s foreign exchange market. The remarks by the IMF came just days after the Reserve Bank of Zimbabwe (RBZ) began issuing the gold-backed digital currency. As previously reported by News, gold-backed digital coins are an attempt by the RBZ to slow down local demand for U.S. dollars. High demand for the greenback versus its limited supply on the formal market has fueled the local currency’s slide on the parallel market from just over US$1 : ZWL1000 at the start of 2023 to around US$1 : ZWL2000 by the end of April. In the past year, the RBZ responded to the local currency’s depreciation by hiking the benchmark rate. During the same year, the central bank unveiled physical gold coins which it said would act as an alternative store of value. However, after the RBZ started circulating the gold-backed digital currency, a spokesperson for the IMF warned of several risks that such a digital currency would bring.