Introduction
It is the mandate of Bank of Ghana (BoG) to among others introduce currency notes, coins and ensure protection of same. Therefore the introduction of the new higher denominations of the Ghanaian cedi is not the issue.
The issue is, in order to manage cost, the issuance of notes should be planned and executed to avoid frequency of this activity. Some Therefore questions dealing with how criminals will benefit from higher currency notes are legitimate. The European Union is investigating the use of its €500 because of reported benefits to criminals Some currency notes were introduced at the beginning of the second quarter of the year. Why not do all at same time?
The issue is also not about rounding up effects as happened under the redenominations in 2007 which led to price increases. The issue is not about whether the Central Bank can introduce higher denominations or not.
What is is the main issue?
The issue is about relating the introduction of higher denominations to the value of the cedi.Another issue is about the cost implications of the printing of the new notes to the public and whether the right procurement method was used.
It is already empirically available that introducing higher currency denominations creates opportunity for money laundering .
The argument about efficiency and high volume transactions is not attractive as the use of cheque for almost all high volume and medium size transactions over the years. At the time when microfinance ,savings& loans companies and rural banks were solid and trusted, market women and traders , do not carry huge sums on them, they paid into accounts at aforementioned financial intermediaries in the cities and give instructions in the interest of counter parties in the rural areas.
Majority of traders and parties now accept payments through mobile money. One is expecting a system will be put in place to enhance security features and improve the maximum limit on daily transactions.
BoG and government should invest more in such infrastructure that will encourage different payment platforms leading to improvements in volume of cashless transactions.
This is the time to invest in cashless infrastructure and encourage the patronage of same.
Earlier statement
The BoG’s introduction of new notes (¢100 and ¢200) will not strengthen the value of the Ghanaian cedi just as the 2007 redenomination could not achieve same. Government should focus on deepening the financial and security infrastructure which is needed to ensure an enhanced cashless economy. The strength of the cedi will be fortified through value addition for export, research into diversified gross product worth of our commodities, consumption of domestic goods and services as well as realistic public debt management strategies.
*Prof John Gatsi @ GBCnews*
