The
Bank of Ghana (BoG) yesterday introduced two new denominations ‒
GH¢
100 and GH¢ 200 ‒ which it says are high value Ghana cedi banknotes.
The
Central Bank also introduced a new GH¢2 coin.
Why The New Notes?
The
Governor of Bank of Ghana, Dr. Ernest Addison, unveiled the notes and coin,
giving detailed reasons for their introduction.
According
to the Central Bank, high levels of inflation currency depreciation in the past
have eroded some of the gains from redenomination.
It
said the deadweight burden ‒ reflected in high
transaction cost ‒ has re-emerged
and added that the set of higher denominations is expected to address the
increased transaction cost, especially in high-valued transactions in a cash-based
economy like Ghana.
The
BoG added that the structure of the banknotes denomination has changed,
resulting in a shift in demand for higher denominations (GH¢50 and GH¢ 20
account for about 70% of the total demand), reflecting the expansion in income
and prices.
“The
introduction of the higher value denominations in circulation are therefore
necessary to ensure customer convenience, reduction in the costs of printing
and other currency management processes,” the BoG stated.
Transaction Cost
According
to the BoG, ensuring customer convenience, reducing high transaction cost,
efficiency in high-value transactions in cash, reduction of cost of printing,
as well as currency management, including processing, transporting and storing
banknotes, are some of the benefits that come with the introduction of the new
notes.
Inflation Issues
The
BoG indicated that the introduction of the new notes would not lead to higher
inflation, and said the higher denomination was introduced to only ease high
transaction volumes.
“These
notes will only replace some of the large cash transactions done with the
existing GH¢50 and GH¢20 banknotes,” it explained, adding that
“again, the value of currency depends on what you buy with it, rather than
what the face value is.”
Transaction Note
According
to the Central Bank, the GH¢100 would complement the existing high denomination
banknotes to ease high value transaction, but the GH¢200 banknote would be
introduced gradually into circulation and would be in limited quantities.
GH¢2 Coins
The
BoG said it intends to gradually replace its lower banknotes denominations with
coins to reduce its costs of printing.
It
also said it would also embark on a vigorous campaign among road transport
workers, market operators, small businesses, supermarkets, vendors and others
to create avenues for the usage of the coins, including developing
infrastructure for coin usage.
“There will be a nationwide educational campaign focused on the security features, proper handling of banknotes and promote usage of coins,” the BoG stated.
BY Melvin Tarlue
