Zimbabwe Banks Explore Gold-backed Digital Tokens as Loan Collateral

  • The country plans to establish a digital currency for everyday transactions.
  • Singapore, India, and Nigeria are among the countries that have launched CBDC.

In an effort to modernize its financial systems and expand lending options, banks in Zimbabwe are considering the use of the newly released gold-backed digital tokens as collateral for loans.

This move comes as the country’s central bank aims to establish a digital currency that can be used for everyday transactions, prompting financial institutions to adapt their systems to accommodate this innovative form of payment.

In a recent email response to Bloomberg, the Bankers Association of Zimbabwe expressed its support for adopting the gold-backed digital tokens. According to the association, lenders will need to incorporate a third currency into their existing systems to facilitate the acceptance of these tokens as a means of repayment.

Also, the association said in the statement:

As the balances on gold-backed digital tokens transacting currency grow, there is potential for the banks to offer all products that are offered in Zimbabwe dollars and US dollars.

Last week, Zimbabwe’s central bank received 135 applications for the purchase of the newly released tokens. This amounts to a total value of 14 billion Zimbabwe dollars, equivalent to 11 million US dollars.

Furthermore, the tokens are backed by the country’s gold reserves, which currently stand at 140 kilograms or 309 pounds. In a subsequent auction held on Thursday, tokens worth over 71 kilograms of gold were sold.

Notably, the Bahamas, Singapore, India, and Nigeria have already launched digital currencies backed by their respective central banks. On the other hand, the United Kingdom is seeking public input on a central bank digital currency (CBDC).

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