The last time there was a talk of gold coins in Africa, it was under the reign of Muammar al-Gaddafi in Libya. To control inflation in the country, the Reserve Bank of Zimbabwe has revealed its decision to introduce gold coins later this month.
According to the apex bank, inflation in the country has weakened the local currency beyond expectation. To curb the effect, banks will release gold coins as legal tender across the country in the last week of July 2022.
The gold coin has been named ‘Mosi-oa-Tunya Gold Coin’ – named after Victoria Falls. The Central Bank also added that the gold coins could be converted to cash.
Reports indicate that the rates of inflation in the country doubled last month to as high as 191%. Locals and members of the international community are scared of a reoccurrence of the hyperinflation the country experienced in the early 2000s.
During the period, the Zimbabwean dollar was redenominated three times until the local currency was abandoned in 2009.
The governor of the Central Bank of Zimbabwe, John Mangudya, revealed in a statement that “the gold coins will be available for sale to the public in both local currency and US dollars and other foreign currencies at a price based on the prevailing international price of gold and the cost production.”
Mr. Mangudya also added that the gold coins are expected to act as a ‘store of value and to reduce the demand for US dollars.’
However, the decision of the apex bank has been received with mixed reactions, with critics saying that the move was responsible for the weakening of the value of the local currency in the early 2000s. They fear that the bank – and indeed the country, is making the same mistake as it made some twenty years ago.
As a result of the actions then, many citizens lost their life savings and pension when the Zimbabwe dollar officially crashed in 2009.
The central bank last week raised interest rates to 200% from 80% and has outlined plans to make the US dollar legal tender for the next five years.
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