The Sunday Mail
Persistence Gwanyanya
From birthday gifts to tombstone flowers, the anxiety economy is worth billions.
While the market was still ruminating over the future of the Zimbabwe dollar, the announcement of the issue date of the digital gold tokens has shifted discussions on the currency.
The question is no longer whether the Zimbabwe dollar will survive the current bout of instability, but whether the digital gold-backed tokens will be accepted by the market as an alternative to the United States dollar.
For many gold pundits, the acceptance by the market and demand for the physical gold coins should give us a clue about prospects for the uptake of the digital gold tokens.
The unmet demand for physical gold coins attests to the attractiveness of the instrument.
Arguably so, because the arbitrage between the official exchange rate and parallel market rate makes it difficult for anyone to resist.
As such, there is reasonable expectation of huge demand for digital gold tokens starting tomorrow, when they are released into the market.
If that happens, then I see the arbitrage gap closing faster, to the relief of the market.
The accessibility of the digital gold tokens is seen as a key attraction of the product by the market.
At US$10, the minimum subscription limit for individuals is seen as accommodating.
Even the least-paid employee can afford to buy some digital gold tokens from their salary.
For corporates, a minimum subscription limit of US$5 000 is fair given the average size of businesses in Zimbabwe and the anticipated demand for the product.
In a clear demonstration of interest in digital gold tokens, l received advice from the market for the central bank to consider including telecoms companies on the list of institutions that can issue digital gold tokens.
The current position is that issuance of the digital gold tokens will be done through commercial banks, building societies and PEOPLE’s OWN SAVINGS BANK (POSB).
These shall establish e-gold wallets and e-gold cards as channels to access and transact with digital gold tokens.
Given the high mobile phone penetration rate in Zimbabwe, the suggestion to include telecos on the list of issuers sounds sensible.
Even the operation of the e-gold wallets on mobile money platforms sounds like a good idea.
The interest in the digital gold tokens by retailers and wholesalers l interacted with is quite comforting.
They see the digital gold token as capable of salvaging their businesses from the accelerated depreciation of the local unit.
They have been losing competitive advantage to small and informal businesses that have been rejecting the Zimbabwe dollar and insisting on transacting in US dollars.
Given their visibility and position in the market, it is very difficult for them to reject the Zimbabwe dollar without facing consequences. The acceptance of digital gold-backed tokens by key wholesalers and retailers will be a huge relief to the transacting public.
We hope schools and medical service providers will cooperate and accept the digital gold-backed tokens for transactions.
For investment purposes, liquidity and prescribed asset status are seen as cementing their attraction.
As such, the Reserve Bank of Zimbabwe (RBZ) is expecting the product to be oversubscribed.
That could be the reason for a shorter period for the offer, from May 8 to 10.
There is need for the RBZ to sacrifice and meet the demand from the market if we are to see the effectiveness of the product.
In the transaction space, the operation of a gold digital currency is akin to the Central Bank Digital Currency (CBDC) and it comes at a time when the RBZ is working tirelessly to establish that currency.
The whole world is moving away from cash to CBDC.
The gold-backed digital currency will give us a strong base to introduce the CBDC. I see the digital gold tokens becoming the new normal in Zimbabwe.
Persistence Gwanyanya is the founder of Bullion Group and a member of the RBZ Monetary Policy Committee. He writes in his personal capacity. For feedback, WhatsApp +263 773 030 691
