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Question

In which way is gold backing the new digital currency in Zimbabwe?
  • The currency will be pegged to the price of gold
  • The government will hold gold reserves to back the currency
  • The currency will be directly convertible to gold
  • None of the above
Answer- B
In order to address the declining value of the Zimbabwean currency, the Reserve Bank of Zimbabwe (RBZ) is set to launch a digital currency backed by gold.

The digital currency, in the form of gold tokens, will function as electronic money and will be supported by gold reserves held at the RBZ.

This move aims to provide an option for holders of small amounts of Zimbabwean dollars to exchange their money for digital tokens, thereby safeguarding themselves against exchange rate volatility.