IMF Warns Zimbabwe Against Launching Gold-Backed Crypto Asset

IMF Warns Zimbabwe Against Launching Gold-Backed Crypto Asset

The International Monetary Fund (IMF) has always been averse to the growth of cryptocurrencies and similar digital assets. Recently, the IMF has cautioned Zimbabwe against implementing a gold-backed digital asset to stabilise its economy against the fluctuating US dollar. The financial body fears that this could disrupt the existing financial system in the country. Instead, the IMF recommends Zimbabwe to ‘liberalise its foreign exchange market’ rather than launching the digital asset.

Zimbabwe’s Plans for Digital Gold Token

Zimbabwe is planning to allow the exchange of small denominations of its dollar for the digital gold token to protect their investments against market fluctuations. The country hopes to use this planned stablecoin to fight the inflation situation in Zimbabwe. However, the IMF has reached out to the regulators of Zimbabwe, suggesting avoiding the integration of crypto-like digital assets in its financial system. The IMF has asked Zimbabwe to consider putting strict monetary policies in place to protect its citizens against market upheaval.

The IMF has expressed its concerns with the growth of digital assets in the past. It criticised El Salvador for integrating Bitcoin with its traditional banking system, which is reliant on the US dollar. El Salvador became the first nation to legalise Bitcoin as a payment option alongside its fiat currency, the US dollar, in September 2021. The IMF also got Argentina, which was struggling with debt, to sign a deal that ‘discourages’ crypto use in return for financial aid in 2022.

In conclusion, the IMF has urged Zimbabwe to conduct a careful assessment to ensure the benefits of launching the gold-backed digital asset outweigh the potential risks it poses. Zimbabwe has not yet responded to the IMF’s suggestions or concerns. It remains to be seen whether Zimbabwe will follow through with its plans or consider the IMF’s recommendations.


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