Gold-backed tokens now available!

Harare | With effect from yesterday, the gold-backed digital tokens—now known as Zimbabwe Gold or ZiG—became an accepted method of payment for domestic transactions.

All transactions must go through ZimSwitch and the RTGS system, just like transfers of US dollars and Zimbabwean dollars between bank accounts, and swipe machines are now available.

It is backed by bars of physical gold held by the Reserve Bank of Zimbabwe, and those holdings will now be audited by external auditors to ensure that the total of ZiGs issued by the RBZ are backed by at least the same amount of physical gold in a vault. The ZiG is issued in units of 1 milligramme of gold, and yesterday it was worth $377,77 or 6,14 US cents.

The tokens have been accessible as an investment or store of value for a while, but they may now be used for purchases and sales if both the buyer and the seller have ZiG bank accounts and agree to accept the token as payment.

Dr. John Mangudya, governor of the Reserve Bank of Zimbabwe, stated in a statement yesterday that the ZiG’s value would be equivalent to that of the actual Mosi-a-Tunya gold coin and would continue to be influenced by the price of gold on the world market since it is backed by gold reserves held by the RBZ.

In addition to their use for value preservation, the RBZ Monetary Policy Committee approved the use of ZiGs as a form of payment for domestic transactions at its meeting on September 26.

“Banks will have specialised ZiG accounts and handle ZiG transactions in the same manner they handle local and foreign currency transactions.

“The applicable intermediated money transfer tax (IMTT) will be equal to half of the IMTT applicable to transactions in foreign currency, and the relevant legal instrument to that effect will soon be published.” Although the ZiG is an investment tool rather than a currency, it now has certified transactional capabilities that people and institutions may use to increase their wealth and make payments when the buyer and seller agree.

Dr. Mangudya stated that the RBZ had hired external auditors to verify the availability and sufficiency of gold to back the ZIG at any given time, which should inspire confidence among investors and the general public. This was done to allay concerns that the RBZ would maintain gold reserves sufficient to back the ZIGs in bank accounts.

The tokens will be exchanged through the Rapid Transfer Gross Settlement (RTGS) mechanism in support of their newly added role as a medium of exchange. The tokens were initially issued through the Central Securities Depository.

Dr. Mangudya previously stated that the gold-backed digital tokens were being released to increase the number of value-preserving instruments accessible in the economy, improve the divisibility of investment instruments, and increase access to and usage of these instruments by the general public engaged in commerce.

The Gold-Backed Digital Token will be known as Zimbabwe Gold (ZiG) for transactional purposes.

The tokens serve as the RBZ’s genuine gold’s digital representation. On the RBZ website, the value of a ZiG is quoted every day.

The tokens will be available for institutions and people to purchase through their banks using local or international cash.

It will be simple to obtain very near to the price in the actual currencies in use since the tokens will be divisible down to the lowest unit of gold measurement, a milligramme.

Additionally, because the tokens reflect gold, owners will be able to profit if the price of gold rises on international markets, providing a flexible and trustworthy hedge against value loss during inflationary times.

“The Central Securities Depository (CSD) system was used for the first issuances, and banks informed their clients of their allocations. The RTGS system would be used moving forwards to handle difficulties, according to Dr. Mangudya.

In a similar spirit, the RBZ said that accounts have already been set up for settlement by all of the participating banks using the RTGS system.

Participating banks are required to make ZiG available for use in internet channels, card transactions, POS transactions, and client accounts. The cards will include milligrammes that are represented on the owner’s ZiG account.

These milligrammes will be transferrable and capable of enabling transactions between individuals and between individuals and businesses.

The RBZ states that these transactions will be settled on the RTGS system and cleared through the ZimSwitch.

The concept, according to banker Mr. Raymond Chitsuwa, makes it simpler for the buyer to know their balance because the transaction is now between the RBZ and the buyer or seller of ZiG.

The central securities depository technique, which requires the customer’s bank to inform their client that their purchase of ZiG has been successful, is more complicated to utilise in such a transaction than the RTGS system. The customer will now have a bank account and be able to do business like any other account we have, including the nostro and local currency accounts, he added.

Financial institutions will also maintain nostro and local currency accounts alongside ZiG accounts. The ZiG account will continue to be operated and settled in milligrammes.

Dr. Mangudya has already said that there will be no account maintenance fees or tariffs for ZiG accounts.

Financial institutions must price ZiG transactions responsibly, fairly, and at an affordable price for the benefit of the buying public. The cost of the transfer is known as the transaction price.

Dr. Mangudya stated that because the RBZ would be the only issuing bank, banks are not permitted to lend ZiGs or pay interest on holdings.

Only once the RBZ issues or redeems the ZiG, will the amount of the currency alter in the market.

Customers that own actual gold coins can choose to tokenize them, and the secondary market can be used for this.

In cases when investors have gold coins and need ZiG, participating institutions can assist, according to the RBZ.

“Where the banks cannot exchange the physical gold coin, they should approach the Bank after the vesting period for redemption and payment in local currency, foreign currency, or ZiG,” said the RBZ.

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