Graphic Business News

BoG to regulate circulation of new currency notes

By: Ama Amankwah Baafi
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Mr Phillip Abradu-Otoo (5th left), Director of Research, BoG, with some officials of the BoG and some members of the IFEJ
Mr Phillip Abradu-Otoo (5th left), Director of Research, BoG, with some officials of the BoG and some members of the IFEJ

The Bank of Ghana's (BoG) policy is to ensure that the new GH¢100 and GH¢200 notes are in limited quantities so as not to add on to the amount of money to create inflationary pressures, the Director of Research, Mr Philip Abradu-Otoo, has said.

He said the BoG was guided by the adage that too much money in the economy caused inflation.

"What the Bank of Ghana will be doing is to put in the currency in very limited quantities in the sense that the currencies will only be issued to replace those that are earmarked for destruction by the Currency Department," he said at a BoG training for journalists in partnership with the Institute of Financial and Economic Journalists (IFEJ).

He said when those currencies were off the series and out of circulation, the new ones that would be put in the system would either be the GH¢100 or the GH¢200 note.

By so doing, he said the stock of money in the system would be kept constant to ensure that it did not add to inflation in the economy.

"I am very confident that the issue of inflation rising out of the introduction of these new notes will be muted,"  he stated.

Processes
Mr Abradu-Otoo explained that the process to introduce the new denominations started in March 2017 when the BoG took another look at its own currency management process.

He deduced that similar to all jurisdictions, countries reassessed their currencies every five to 10 years to see if they needed to bring on board new higher denominations to facilitate economic transactions.

Consequently, he said as part of the research, the bank visited all market centres, talked to market women and tried to assess from the traders which of the currency notes did not help to facilitate their business.

"It emerged that about 70 per cent of the population still relied on cash for transactions despite efforts to move towards electronic banking," he stated.

He also said it was realised that the economy was gradually moving to the stage when high valued transactions were conducted in large sacks, and which all create inefficiency.

"So the central bank did not just print the new denominations. It has been two years of thinking and of work," he added.

The training
The training was organised on the theme 'Achieving Sustainable and Balanced Growth in the Banking Sector’ to enhance the knowledge of financial and economic journalists on reporting in the financial sector.

It is also part of the financial literacy programme or campaign of the BoG to empower journalists to report on the sector.