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According to Zimbabwe’s Finance Minister, Crypto could be the solution to the cash shortages the country is facing. This comes barely two weeks after Mthuli Ncube’s appointment as Zimbabwe’s Minister of Finance. According to Mthuli, cryptocurrencies could solve the cash woes the country has been fighting for two years; he is taking this concept further by engaging Zimbabwe’s Reserve Bank to establish a cryptocurrency wing, charged with the responsibility of conducting research and implementing digital asset solutions.
Ncube cited Switzerland as an example of a country that has adopted a more open-minded approach to digital assets, tasking Zimbabwean authorities to learn from such pioneer nations. This, he said, would help the country better serve the teaming youth and provide better perspectives on how to regulate the digital assets industry.
If this move succeeds, Ncube would be turning the tables for the better. Financial institutions in the country were previously prohibited from processing crypto-based transactions.
Why Zimbabwe needs a crypto solution
Today, cryptocurrencies are no more money meant for criminals, they are not money for terrorists and drug traffickers, and are equally not money for nerds – they have become global financial instruments that provide better solutions to rival fiat in many aspects.
In recent research on the relationship between money laundering and cryptocurrency in Japan, a country that boasts of a booming digital currency market, cryptos accounted for less than 1 percent of money laundering activities. As the market matures, the ability of criminals to use cryptocurrencies for illicit activities has drastically reduced. Crypto users are law-abiding citizens who are in the ecosystem as a result of privacy, especially when it comes to the money they spend.
The fact that cryptocurrencies are immune to global exchange rates, can secure personal information, and enable cross-border transactions at low or near-zero fees, makes them the perfect tools for Zimbabwe to survive its cash woes. As the new finance minister puts it, “Further, cryptocurrencies can be used to facilitate tax evasion as well as the externalization of funds in violation of a country’s laws“.
On a more serious note, fiat is failing the Zimbabwean economy. The nation’s financial institutions have imposed restrictions on the amount of money that savers can withdraw from their accounts. As a result, citizens are better off keeping their money under their pillows. This is not just making the country’s currency useless; it is equally dwindling foreign currency reserves, a situation that does not seem to stop any time soon.
In such a situation, the country’s best bet, as envisioned by the new finance minister, is to turn to cryptocurrencies for transparency, stability, and spurring future digital assets innovation.