![\"\"](\"https:\/\/ghanamma.com\/wp-content\/uploads\/2019\/08\/1566039277_850_bog_boss_ernest-696x467.jpg\" "\\"bog_boss_ernest\\"\/")
Ghana,
\n some say, is a very interesting country. But I say the interesting
\naspect depends on which lenses you have on to view national
\ndevelopments. <\/p>\n
Even
\n though many have fondly accused Politicians as the ones who influence
\nthe Bank of Ghana, which is an independent institution, to either issue
\nnew banknotes or put more money in circulation, I will beg to differ. <\/p>\n
I
\n think the central bank has enough technocrats and professional men and
\nwomen who have in-depth knowledge of the economy and must at all times
\ntake decisions that will not hurt or destroy the very economy they have
\nhelped to build over the years.<\/p>\n
However,
\n it won\u2019t also be far from the truth, to say that sometimes, depending
\non which government is in power, these technocrats who are in charge of
\nmonetary issues make decisions that open them up for criticisms from the
\n public. This also allows the very politicians who, depending on who is
\nin power, to either align to their decision or accuse them of
\nwrongdoing.<\/p>\n
When
\n you check on timing of the decision to introduce new currency
\ndenominations or just managing circulation (which may involve putting
\nmore currency in circulation) since we returned to constitutional rule,
\nmost of them are too close to elections. <\/p>\n
Most
\n times, it is just about a year before the general elections but that is
\n not even the reason why I am typing plenty today. \u00a0I am sure you are
\nasking: \u201cwhat then is your problem now?\u201d<\/p>\n
Well,
\n for you who are reading this piece, on \u201cblack\u201d Friday morning we all
\ngot the news that central bank or the Bank of Ghana was issuing new
\nbanknote denominations \u2014 100, 200 cedis and 2 Cedis coin. <\/p>\n
This cedi on sale on \u201cBlack Friday\u201d came as a shock to me given that the Bank had earlier denied the possibility of issuing new notes, even if vaguely. <\/p>\n
But
\n what reasons did Governor, Dr Ernest Kwamina Yedu Addison, assign to
\nthe decision to roll out this new currency denomination? The first point
\n the governor made was to link the new banknotes to the nostalgic
\nredenomination of the currency some twelve years ago.<\/p>\n
To The \u201cAt Cedi Depreciation<\/strong><\/p>\n Before Per Governor Addison\u2019s own statement, this means the currency over time had depreciated but the question is \u201cna who cause am\u201d? <\/p>\n The See below the image as captured from the terminal which gives you the Ghana Cedi to the US dollar cross rate.<\/p>\n Fig.1, Shows one-year daily performance of the Cedi against the dollar <\/em><\/p>\n Source: Bloomberg Terminal <\/strong><\/p>\n Fig. 2, Shows the graphical representation of the performance of the cedi one year.<\/em><\/p>\n Source: Bloomberg Terminal <\/strong><\/p>\n The On To Having provided the above data or figures gives all of us a clear picture of how our currency is doing against the dollar. It is important to note that, with the current depreciation, inflation has remained at single digit even though it looks like some pressures may cause the inflation to go up, even if it remains largely within the band set by the Central Bank, which is plus or minus 8%.<\/p>\n Fig. 3 Year-on-Year Consumer Price Inflation Graph.<\/em><\/p>\n Source: Bloomberg Terminal<\/p>\n But Also Normal Practice, the Governor says<\/strong><\/p>\n Again, Given Perhaps, But Encourage criminality<\/strong><\/p>\n Dear Higher Let India The This Technology and Innovation <\/strong><\/p>\n The When Question Why, I After The I \u201cWhile Just So If The So the question is, what level of consultations and education took place, before the introduction of the new banknotes. <\/p>\n Tax evasion<\/strong><\/p>\n This You may ask what I mean. A cash-heavy economy encourages and allows people to invade tax. <\/p>\n I Education before Introduction of New Currency<\/strong><\/p>\n Another No It\u2019s Conclusion<\/strong><\/p>\n One We Am so sorry Mr Governor and my friends at the Bank of Ghana, you have brought this misinterpretation and suspicion of election money to yourself. No matter how you look at it, you got the timing wrong and you have a whole lot you need to do to win the confidence of the people.<\/p>\n I rest my case.<\/p>\n Source: Ghana | Norvan Acquah-Hayford | Joy Business <\/p>\n This Dr Ernest Addison, BoG Governor Ghana, some say, is a very interesting country. But I say the interesting aspect depends on which lenses you have on to view national developments. Even though many have fondly accused Politicians as the ones who influence the Bank of Ghana, which is an independent institution, to either issue new […]<\/p>\n","protected":false},"author":1,"featured_media":756676,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-756675","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business"],"yoast_head":"\n
\n quote a few of the things he said while also referring to the upgrade
\nexercise the central bank embarked on in May this year, the upgrade
\nexercise retained the design features of the existing series of
\nbanknotes and coins as introduced twelve years ago in 2007, in a redenomination exercise<\/strong>. <\/em><\/p>\n
\n exercise also sought to recalibrate the currency due to significant
\ndeadweight burden which was a legacy of long periods of high inflation
\nand currency devaluation.<\/p>\n
\n the time of the redenomination, GH\u00a21 was equivalent to US$1. The
\nhighest denomination then was GH\u00a250 and was equivalent to the US$50.
\nTwelve years after the redenomination exercise, sustained periods of
\nhigh inflation and the perennial depreciation of the currency have
\neroded, in real terms, the face value of the series of the notes,\u201d the
\nGovernor said.<\/p>\n
\n I even continue the conversation, I ask this simple question: \u00a0per what
\n the governor is saying, should we now believe the school of thought
\nthat the cedi is overvalued and needed to be allowed to depreciate to
\nits natural value? How does putting larger notes in circulation resolve
\nthe problem of the cedi when, due to the portability of large
\ndenominations, many experts are of the view that it encourages most of
\nthe illicit (trading) activities that are likely to undermine the local
\ncurrency?<\/p>\n
\n Cedi in year-to-date, ending November 29, 2019, has performed very
\nbadly. It has depreciated by 11.97% according to the Bloomberg terminal
\nat the close of trading. <\/p>\n![\"Bloomberg](\"https:\/\/ghanamma.com\/wp-content\/uploads\/2019\/12\/2824485586386_3678739145967.jpg\")
<\/figure>\n![\"Bloomberg](\"https:\/\/ghanamma.com\/wp-content\/uploads\/2019\/12\/3165603202612_3334526175736.jpg\")
<\/figure>\n
\n Governor again said, \u201cthe new higher value denominations will only
\nrestore partially the dollar value of the higher denomination GH\u00a2200 to
\nabout US$40, not quite close to levels in 2007, but high enough to
\nsignificantly reduce the deadweight burden and high transaction cost in
\nmaking high-value purchases in a cash-based economy like Ghana.\u201d Thank
\ngoodness, we are being spared another \u201cvalue is the same, despite the
\nnostalgia with redenomination.<\/p>\n
\n this note, as with the hints on banking sector recapitalization, are we
\n to expect more milder forms of redenomination in the coming years?
\nGiven the effect of its decisions on the economy and our pockets, should
\n other government bodies such as Parliament demand regular briefings,
\nincluding public hearings, from BOG on the impact of its policies before
\n implementation? <\/p>\n
\n continue, the point made by the Governor is something I disagree with.
\nIn fact, according to the\u00a0Bank of Ghana [22-Nov-2019 20:02:19 Summary of
\n Macroeconomic and Financial Data], the Cedi had depreciated by 10.37%
\nfrom the 7.83% recorded in October 2018, while in November of the same
\nyear 2018 the cedi had depreciated by 8.12%. <\/p>\n![\"Bloomberg](\"https:\/\/ghanamma.com\/wp-content\/uploads\/2019\/12\/8595346273647_3097868384379.jpg\")
<\/figure>\n
\n the question remains: what then is the cause of the Cedi\u2019s continuous
\ndepreciation, which saw it close trading at 5 cedis 66 pesewas at the
\nclose of trading on November 29, 2019, according to the Bloomberg
\nterminal?<\/p>\n
\n with banks or financial institutions creating money, artificial as it
\nis, and average interest rate around 23.65% as at the end of October, as
\n per the central bank\u2019s data, you ask if issuing of the new higher
\ncurrency denominations is the best solution to some of the issues
\nenumerated by the Governor. <\/p>\n
\n our learned Governor said during his speech that, \u201cAs is the normal
\npractice in all jurisdictions, Central Banks do periodically undertake a
\n review of the structure of their currencies with the view to making
\nsure that they are aligned with macroeconomic conditions and demand. In
\nfact international best practices requires monetary authorities to
\nreview their currency regimes at intervals of between five (5) and ten
\n(10) years with the aim of ensuring that demand for banknotes are well
\naligned with economic activity, address weaknesses and challenges
\nassociated with the management of notes and coins in circulation, assess
\n the non-usage of a particular series to ensure efficiency in printing,
\nand address technological innovations that impact the usage of
\ncurrencies.\u201d<\/p>\n
\n that middle income and advanced economies do not print higher
\ndenominations at random and at such short intervals, it seems the
\nGovernor conceding to what other economic managers are refusing to
\nacknowledge.\u00a0 I ask if this accommodative policy means that we should
\nintroduce new currency when the cedi becomes weak, as a result of
\nproblems with fiscal and real sector management. If so, will we ever
\ncontemplate the issuing of lower and withdraw high-value notes in
\ncirculation?<\/p>\n
\n I am so ignorant and cannot read in-between the lines that are why am
\nso worked out at this move. I avail myself for any education. But until
\nthen, allow me to point to Dr. Addison\u2019s own statement which he said the
\n central bank has the mandate to ensure that demand for banknotes are
\nwell aligned with economic activity, address weaknesses and challenges
\nassociated with the management of notes and coins in circulation, assess
\n the non-usage of a particular series to ensure efficiency in printing,
\nand address technological innovations that impact the usage of
\ncurrencies.<\/p>\n
\n the practice, I am sure, has been changing with time and the man at the
\n central bank should not be taking us back into time when things are
\nchanging.\u00a0 [unclear].<\/p>\n
\n friends, if you know why the US does not issue anything above the 100
\ndollar bill or note\u2014or why the EU contemplated withdrawing its high
\ncurrency denomination\u2014then am sure you would agree that this single
\naction of the central bank may be a bad move for the economy. <\/p>\n
\n banknotes are what criminals use in perpetuating their criminal
\nactivities and it seems \u201cblack market\u201d activists such as drug barons,
\nterrorist, smugglers, money launderers er all will have a good field to
\nundertake their activates.<\/p>\n
\n me take you to the European Union where they ditched the 500 euro bill.
\n The European Central Bank (ECB) at the time in 2016 said they decided
\nto stop issuing the high-value note by the end of 2018 in a bid to
\ntackle money laundering and the financing of drugs and terrorism. \u201cThe
\nother denominations\u2014from \u20ac5 to \u20ac200\u2014will remain in place,\u201d it said
\naccording to the quartz website.<\/p>\n
\n which also was under British rule in May 2018, decided that the Indian
\ncurrency which was trading at \u20b967.13 against the US dollar, had hit its
\n15 months low. Narendra Modi, the Prime Minister of India, then made an
\nunexpected policy move that same year in a televised announcement,
\nordered that the \u20b9500 and \u20b91,000 bills would be demonetised.<\/p>\n
\n objectives behind this abrupt decision according to theculturetrip.com
\nwere to eliminate illegally obtained cash, get rid of fake currency and
\nencourage a move towards a cashless economy.<\/p>\n
\n then begs the question as to why the central bank of Ghana at this time
\n will want to issue or print new banknotes. Am sure you have more
\nquestions on your mind than me.<\/p>\n
\n bit of the technological innovation brings to mind, the whole talk
\nabout going cash lite. Initially, it began as going cashless but there
\nwas a retreat to say, it was not possible to have a fully cashless
\neconomy. That then meant cash lite which basically means reducing the
\nmonetary transaction from heavy cash to significant terms. <\/p>\n
\n this talk began the central bank then set-up the Ghana Interbank
\nPayment and Settlement Systems Limited (GhIPSS) in May 2007 with a
\nmandate to implement and manage interoperable payment system
\ninfrastructures for banks and non-bank financial institutions in Ghana.
\nWhat this meant is that they were going to serve as the bridge to allow
\nbank systems to talk to each other and allow seamless transactions, with
\n one of the aims being to prevent individuals and businesses from
\ncarrying bags of money to make payments of any sort.<\/p>\n
\n is this what has become of the policy?, that today the Bank of Ghana
\nsays we need high denomination banknotes for the business community who
\nhave complained that, they have to carry a lot of money, in sacks and
\nbags to undertake business transactions.<\/p>\n
\n is it that those they have to pay do not have banks accounts, or that
\nthey are not part of the financial system? Are we not hoping to even
\nmove and rope in the non-formal sector into the banking system? <\/p>\n
\n heard something about the security of the business community for
\ncarrying bulk cash. Am so disappointed in these men and women from both
\nsides, I mean the central bank and the business community. Even the
\nbanks have shocked me the more but maybe, they don\u2019t want to offend the
\nregulator which is now eye red and will deal ruthlessly with any of them
\n if they went wrong. <\/p>\n
\n all the funds they have spent on technology and innovations to promote
\nthe cash lite interoperability and GhiPPs agenda, their regulator turns
\nto introduce new and even higher banknotes. I can recall what the
\nGovernor said during the last MPC press conference and permit me to
\nquote him verbatim: \u201cIn an increasingly digitized environment, the Bank
\nof Ghana has evaluated its role in a digital economy.<\/p>\n
\n Central Bank is in discussion with key stakeholders to explore a pilot
\nproject (in a sandbox environment) on central bank digital currency with
\n the possibility of issuing the e-cedi in the near future.\u201d Should he
\nand his team not spend their energies and time plus the taxpayers\u2019 funds
\n on this than higher banknotes.<\/p>\n
\n interestingly Governor Addison was quick to tell us not to misinterpret
\n the introduction of these high-value notes to mean he and his team at
\nthe helm of affairs were shifting away from the Banks policy of pursuing
\n a cashless society and promoting the use of electronic modes of
\npayments.<\/p>\n
\n vigorously pursuing financial inclusion by accelerating the migration
\nto e-payment platforms, we are also mindful of the relevance of cash in
\nour day-to-day dealings. Undeniably, cash still remains the 5 preferred
\nmedium of payment by the large informal sector in the country,\u201d is this
\nnot even the more reason why we should encourage those in the informal
\nsector to have some sort of dealings with the financial system? <\/p>\n
\n to remind the governor that according to his own data, Mobile Money
\ntransactions value as September 2019 was over 26.4 billion cedis with
\nthe total number of active wallets being 13. 6 million. I have not
\nbrought in cheques, e-zwich and internet banking direct transactions.
\nThis tells you even those in the informal sector are all being pulled
\nalong already in the digital agenda. <\/p>\n
\n what is the justification really for this high banknotes? If the BOG\u2019s
\npolicies overlap, will the closure of a large number of Savings and
\nLoans Banks and Microfinance companies, in particular, not worsen the
\nfinancial inclusion policy?<\/p>\n
\n you want to pay attention to enhancements in the structure, security
\nfeatures and management of cash within the economy then that was why you
\n did the upgrade which was fine. However, what is even hurting is till
\nnow you have not told Ghanaians how much is costing you to do all these
\nimportant things.<\/p>\n
\n business community who the governor and his team say are one of the
\nreasons for the introduction since Friday have all said the central bank
\n should spend time to deal with the depreciation of the cedi and look at
\n how to move the digitization or electronic agenda.<\/p>\n
\n whole process makes diminishes the work being done to rope in more
\nGhanaians to pay tax, especially, through widening the tax net with
\nmeasures that include the digitization agenda. <\/p>\n
\n thought at this time we were to back the Ghana Revenue Authority and
\nthe Vice President\u2019s agenda to move the economy from cash to a cash lite
\n one. This is going to allow the informal sector like our mothers from
\nthe large markets who do heavy transactions and hardly pay tax or don\u2019t
\npay at all to continue not to do so. <\/p>\n
\n thing which is shocking is the lack of pre-education before the
\nintroduction of these set of new currency denominations which use to
\nhappen was entirely missing in this time. <\/p>\n
\n one knows why the central bank decided to spring this surprise on
\nGhanaians by announcing the introduction and the same day it was legal
\ntender and must be accepted by all. But interesting money was expected
\nto be released only on Monday, December 2, 2019, not the day of the
\nannouncement Friday, November 29. 2019. <\/p>\n
\n shocking and this then allows for the kind of discourse we have
\nwitnessed in the last few days. As I have already stated, I think the
\ntiming of this issuance is wrong and the lack of week\u2019s education which
\nherald the introduction of new currencies or upgrades was missing.<\/p>\n
\n man, I respect Theo Acheampong after the announcement writes \u201cNew
\nhigher Ghana cedi denominations indicates our COLLECTIVE INCOMPETENCE in
\n managing the economy. Same reasons given back in 2007 for the
\nredenomination exercise are the ones being given today \u2014 i.e.
\ndeadweight loss of transactions due to ever-increasing inflation bla bla
\n bla. We haven\u2019t learned\/mastered the art of effective macroeconomic
\nmanagement. <\/p>\n
\n messed up e-Zwich, launched a GPS-based location code generator app
\nwithout linking it to proper street names and numbers for a holistic
\npublic address system, and can\u2019t even seem to get simple national ID
\ncards issued at a go. We\u2019d likely be back to this same table again in a
\ndecade. Look, we pamper our politicos and policymakers too much in this
\ncountry. SMH! #GHMusings\u00a0 #ChangeTheParadigm #AskCriticalQuestions\u201d<\/p>\n
\n article contains the views of the writer only and not that of this
\nplatform. You can reach him via the mail norvan986@gmail.com or WhatsApp
\n +233264511013.<\/strong><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"