The governor of Zimababwe's central bank is proposing that the country sell its diamonds to fund a gold-backed currency to replace the defunct Zimbabwean dollar, which was suspended due to hyperinflation, financial news outlets report.

Dr. Gideon Gono, Chief of the Reserve Bank of Zimbabwe (RBZ), reportedly believes that the US dollar is no longer stable enough to serve as a substitute currency for Zimbabwe.

Gono told newzimbabwe.com that the global financial crisis that began in the last quarter of 2008 demanded "a new approach to self-reliance and a stable mineral-backed currency… Gold has proven over the years that it is a stable and most desired precious metal."

Gold is trading at near-record prices, with some analysts predicting that the metal could hit $1,600/ounce by the end of 2011 and $2,000/ounce in one to three years. Zimbabwe's vast mineral resources include an estimated 13 million tons of gold deposits spread across five regions.

The RBZ chief did not address the issue of the international embargo against diamond exports from Zimbabwe.