The Bank of Ghana (BoG) has assured that the introduction of two new denominations ‒ GH¢100 and GH¢200 ‒ which it says are high value Ghana cedi banknotes will not fuel inflation.
BoG’s Director of Research, Philip Abradu-Otoo said the central bank would do everything possible to ensure that the new denominations are in limited quantities.
Speaking at a capacity building workshop in Koforidua for journalists, Mr Abradu-Otoo noted that the central bank would not pour all the new notes into the system to add onto the existing stock of money to create inflationary pressures.
According to Abradu-Otoo, BoG, being guided by the simple adage, ‘Too much money in the economy causes inflation’, “will put in the currencies in a very limited quantity.”
He explained that the limited quantities meant that the new notes would only be issued to replace those that are earmarked for destruction by the currency department of BoG.
“By so doing, the stock of money in the system will be kept constant to ensure that it does not add onto inflation in the economy,” he explained, stressing: “I am very confident that the issue of inflation arising out of the introduction of the currencies will be muted on the economy.”
The BoG Director of Research stated that the central bank did not just spring the new currency on the public and indicated that the process started sometime in March 2017, when the BoG decided to relook at the currency management process and also to assess whether it was time for the currency series to be looked at.
“If you look at jurisdictions all over the world, the time frame of five to 10 years is always a period where countries re-assess their currencies to see whether they need to bring onboard new and higher denominations to facilitate economic transactions,” Mr Abradu-Otoo stated.
He said as the economy grew and as transaction values grew, there was always the need to have high denominational currencies to support transactions.
He disclosed that the central bank carried out a research in the early part of March 2017, at market places across the country to assess from the economic agents which of the currency notes help facilitate their business.
He indicated that the bank arrived at a conclusion that about 70 per cent of the country’s population rely on cash for their transactions.
“Although, there is an effort to move us towards electronic banking, cash is still supreme and cash still reigns,” he pointed out.
He explained that the bank realized that the economy was also moving gradually to that ‘dead-weight-burden stage’ – a point where high valued transactions are conducted with people taking high amount of currencies at the counter of banks.