The Reserve Bank of Zimbabwe plans to issue gold coins as a way for investors in the country to store value as inflation continue to rise distracting the economy.
The Reserve Bank of Zimbabwe, John Mangudya, announced that new gold coins would be minted by Fidelity Gold Refineries (Private) Limited and available to the public through normal banking institutions.
“The Reserve Bank of Zimbabwe’s Monetary Policy Committee (MPC) resolved to introduce gold coins into the market as an instrument that will enable investors to store value.”John Mangudya said.
Meanwhile, the Reserve Bank of Zimbabwe has not announced a timeline for the introduction of the coins. Therefore the Reserve Bank of Zimbabwe is trying to solve a problem it created by printing even more new money, reversing gains made in the past two years. The country has laboured under an inflationary monetary policy for decades.
The availability of gold coins will likely ease pressure on the US dollar in the country. Economist Tatenda Mabhande said the central bank could use the gold coins to ease inflation if it sold them for Zimbabwean dollars. But the coins will more likely be indexed in US dollars. It will basically work as a fundraising scheme for the Zimbabwean central bank, pulling in USD from the market.
“Bad money will drive good money out of the market. We are likely to see the gold coins disappearing as well,” he said.
Mabhande said the gold coins would likely flow out of the country.
