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Bank of Ghana Issues Release Over Statements Describing The Introduction of Higher Ghana Cedi

Jan 06, 2020   •   by   •   Source: Proshare   •   eye-icon 1341 views

Sunday,January 05,  2020   /08:59PM  / By Bank of Ghana /Header Image Credit: bog.gov.gh

 

TheBank of Ghana's attention has been drawn to statements describing theintroduction of new higher Ghana cedi denomination banknotes as an 'ambush'.

 

TheBank would like to inform the general public that the introduction of the newdenominations is the result of a well-thought out currency reform programme.Twelve (12) years after the redenomination of the cedi, high inflation anddepreciation of the currency have eroded, in real terms, the face value of theexisting series of banknotes. The deadweight burden of carrying large sums ofmoney for economic transactions was returning, with the phenomenon of carryingcurrency in plastic bags. As is the normal practice in all jurisdictions,Central Banks undertake periodic reviews of the structure of existingcurrencies. In fact international best practices require monetary authoritiesto review their currency regimes at intervals between five (5) and ten (10)years to (i) ensure that demand for banknotes are well aligned with economicactivity, (ii) address weaknesses and challenges noted in the management ofnotes and coins in circulation, (iii) assess the non-usage of a particularseries to ensure efficiency in printing, and (iv) address technologicalinnovations that improve security features of the currencies. Furthermore, thedenomination structure of the banknote should align well with the needs of thepeople who use it for their daily transactions.

 

TheBank of Ghana begun the process of a thorough review of the structure of thecurrency since 2017 including a note/coin boundary, acceptability and use ofthe individual currency series. The review exercise involved a nationwidesurvey with market operatives, businesses and international stakeholders aswell as some empirical exercises. The outcome of the review process indicated asignificant increase in the demand for higher denomination banknote. It alsocame out clearly that the existing high denominations of GH cedi 50 and GH cedi 20accounted for about 70% of the value of currency stock compared to 27% at thetime of redenomination. At the same time, the volume of banknotes had increasedsignificantly putting pressure on currency processing facilities, storage andlogistics. A resetting of the denominational mix of the currencies improves thecurrency management and reduces costs.

 

Inline with the objective of efficiency and cost effectiveness, the Bank of Ghanaintroduced a new GH cedi 2 coin, GH cedi 100 and GH cedi 200 banknotes denominations intocirculation to complement the existing series. This will ensure customerconvenience, improve efficiency in high value transactions in cash, reduce costof printing as well as enhance currency management processing, transporting,and storing banknotes to generate savings for the country, and address thesignificant shift in the coin/note boundary after the redenomination in 2007.These are technical decisions taken by the Central Bank as part of its mandate.Indeed, Ghana maintains a very strict clean note policy, making our currencythe cleanest across the West African sub-region. This is because sinceredenomination, we have put into place a modern and world class currencymanagement and processing systems to meet the country's currency needs. TheBank of Ghana has received several commendations and has become a model forpeer economies that have visited the country to learn from Ghana's currencymanagement system. Names of the countries in the last year include Kenya,Sierra Leone, Liberia, Uganda, Nigeria, South Africa, Seychelles, India,Mozambique and many more countries in Africa and Middle East. The Cedidenominational mix is key to maintaining this standard.

 

TheBank of Ghana went through its standard processes to introduce the newdenominations with integrity as it is to be expected. The features of the newnotes were unveiled at the launch. This is to avoid counterfeiters and otherchallenges associated with the issuance. Immediately after the launch, the Bankembarked on intensive public education which is still ongoing to ensure theeffective dissemination and use of the new coin and banknotes. Unlike a majorcurrency reform exercise such as the redenomination exercise (a completereplacement of notes), which required several months of public education, thisnew denominations were a simple exercise, maintaining the principal features ofexisting notes, complementing rather than replacing existing notes and involveda gradual easing of the new denominations into circulation. Indeed only alimited quantity was put in circulation in the first month of the launch.

 

Furthermoreit has been alleged that the expenditure is a waste in the context of a new Ecocurrency in 2020. The Bank of Ghana would want to clarify that although theGovernment of Ghana is committed to do all it can to join the West Africancommon currency arrangement, there are many unresolved issues regarding thecommon currency, which would take time to resolve. The Bank of Ghana will beworking with ECOWAS Central banks to ensure that any currency arrangement willbe viable and sustainable.

 

Proshare Nigeria Pvt. Ltd.


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 Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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