Zimbabwe, the African country with one of the highest inflationary rates in the world, would be evaluating several options to adopt bitcoin (BTC) and other cryptocurrencies as legal means of payment, for which they are consulting experts in the field to have more clarity in the matter.
According to the permanent secretary and head of the Electronic Government technology unit in the Office of the President, Charles Wekwete, there are already consultations with the private sector for the project. This was said at a technology forum organized by the Computing Society of Zimbabwe (CSZ), as reported by the local media Bulawayo24.
“The government has put in place a mechanism to try to gather opinions from various sectors of society in order to eventually formulate policies. There have been pronouncements from the Finance Minister and the Reserve Bank of Zimbabwe and it is a complex area. Sooner or later the Government will make statements, but we have not arrived yet, the consultation process is already underway, “the official said.
Wekwete spoke of the fears that cryptocurrencies cause in his country. As specified, are trying to understand the implications emerging market, as these currencies, he notes, “are a fundamental departure from previously known financial instruments.”
“There are many fears about the cross-border movement of funds, money laundering, the outsourcing of funds and the illicit flow of funds to finance illicit affairs,” he noted.
Given that, he invited private actors who already have an idea of how to handle cryptocurrencies to meet with the government, and agreed that “there is a will” in the State to consider the use of these assets.
On what the government is doing to adopt cryptocurrencies, the Zimbabwean military also it was not entirely accurate and he only limited himself to saying that these assets “are something that many governments around the world are still not very clear about.”
Clear intention from other spaces
During the forum, the president of the Zimbabwe Computing Society, Allen Saruchera, showed his open support for the crypto economy, which, he says, provides “many opportunities.” He also highlighted the use of blockchains to provide various services.
In his view, cryptocurrencies involve “all the necessary actors” and within that sector there are people “who are well informed.” “We have to put security in place and it is our responsibility to share and show what can be done,” he said.
This he said in relation to the skepticism of Zimbabwe, where the state is not confident about the advantages of cryptocurrencies, always insisting on the crimes that can be executed through them.
However, that country has changed its perspective a bit, and since March of last year it has made progress in regulating the formal trade of cryptocurrencies. It was a radical change of opinion compared to the state’s stance in 2018, when the Central Bank banned all crypto-asset operations.
And very different from the 2016 decision, when the Bank opposed all bitcoin operations in Zimbabwe, under the excuse of financial crimes.
To show a button: in September, the Zimbabwean finance minister admitted that cryptocurrencies, like bitcoin, are unstoppable. He even went so far as to say that these assets can solve the cash crisis, for which he described the regulation of the ecosystem as urgent, according to CriptoNoticias.
A suffocating inflation for a country in need
Zimbabwe is one of the countries whose inflation is worth studying. It is the first nation in the world to issue a 100 billion dollar bill (Zimbabwean), which at the time only came to represent, at most, 40 US cents. It was about a milestone in the world economy.
Zimbabwe’s hyperinflation, dating from the early 2000s, has its genesis in misguided economic measures, like taking agricultural land on the part of the government, in addition to the refusal to catch up with the debts of the International Monetary Fund (IMF).
The inflation rate became so high that, in November 2008, it was recorded at 89.700.000.000% At that moment, prices were doubling per day. To date, there are no clear figures, but it is known, according to a report by the AFP, which, in April 2020, the variation was 785.6%.
Such was the crisis that, in 2015, Zimbabwean dollars stopped being issued, making way for other currencies that began to circulate. This is the case of the US dollar and the South African rand, which became legal tender and at that time cataloged as the essential currencies for monetary exchange.
However, in 2019, they clarified that the Zimbabwean dollar was the only legal tender, untitling the other currencies, after the crisis and inflation slowed down. In fact, in July this year, they announced the entry into force of the new higher denomination banknote, 50 Zimbabwean dollars, equivalent to about USD 0.40.
Zimbabwe is also a country with a large presence of remittances. In data from World Bank, 7.2% of the gross domestic product (GDP) of the African country in all of 2020 it was due to international money transfers.
And why does bitcoin serve in Zimbabwe?
Starting from the issue of remittances, if bitcoin became a means of payment in Zimbabwe, the fees and commissions for money transfers would be practically non-existent, lightening the burden for those outside their country.
It is also known that the economy of Zimbabwe has undergone a process of dollarization in which citizens repudiate the local currency and They try to save their funds in other assets.
That’s where bitcoin also stands out. The leading cryptocurrency, which by many is considered a shelter asset, You can help Zimbabweans weather their country’s economic crisis, like a currency on par with the US dollar. This, while considerably updating the finances of that African nation.
The fact is that bitcoin, due to its saving and trading capacity, it would help both Zimbabweans and the local economy to rebound. Its decentralized and anti-inflationary characteristics make it a suitable asset to become a means of payment in that troubled country.
Bitcoin is nothing more than a solution, capable of providing the financial stability that Zimbabwe so badly needs, granting the monetary freedom that prevents entering into crisis. The opposite is to continue with fiat money and a traditional system such as Zimbabwean, prone to inflation that is still latent.
The important thing? Right now there is a high level of acceptance and interest from Zimbabweans regarding BTC, who recognize it as a financial tool that can protect them. It only remains to wait.