A lot of thinking went into new notes-BoG boss

Governor of the Central Bank Dr. Ernest Addison has said a lot of thinking went into the new denominations introduced.

Addressing a press conference on Friday he said: “A lot of thinking went into the decision to introduce the higher denomination banknotes.”

He also indicated that the introduction of the new denominations is an outcome of about two years of a probe into the state of the currency more than a decade after the re-denomination of the country’s currency in 2007.

“In March 2017, Bank of Ghana began a process of conducting a thorough review of the structure of the currency including the note, coin boundary, and acceptability and use of the individual currency series,” the BoG said, adding that the process involved a nationwide survey with market operators, businesses and “international stakeholders as well as some empirical exercise”.

Dr. Addison said the result of the consultations revealed that many people were concerned about “dead-weight burden issues on the economy due to significant inflation and perennial depreciation of the currency and the significant increase in the demand for higher denomination banknotes.”

He explained that the exercise to introduce new denominations is in line with international best practices where a periodic review of banknotes and coins are done to make sure that they are aligned with macroeconomic conditions and demand.

“International best practice requires them to review it at intervals of between 5 and 10 years,” he added.

The general design of both notes follow the style of existing Ghana cedi banknotes.

PUBLIC SECURITY FEATURES

1. NEW MOTION SURFACE STRIPE (SECURITY THREAD)

It is the wide shiny stripe that runs down the front of the banknote from top to bottom.

2. OPTICALLY VARIABLE MAGNETIC IMAGE (OVMI) – SPARK LIVE

It is a shiny colour changing image of the Adinkra symbols STRENGTH’ on the GH¢100

and ‘ONLY GOD’ on the GH¢200.

When the note is tilted, a shiny bar moves up and down the symbols. The colour changes from Gold to Green when tilted.

3. MORE PROMINENT WATERMARK

It is the image of Tetteh Quarshie with a cocoa pod which has been made more noticeable in

the plain star area of the banknote. It becomes visible on both sides when viewed against light.

The denomination value can also be seen in the watermark.

4. ENHANCED IRIDESCENT BAND AT THE BACK OF THE BANKNOTE

It is a golden bond with gold bars at the back of the banknote that runs from top to bottom. It can be seen more clearly when the note is tilted.

The upper part has a three-dimensional image of an Adinkra symbol moving above an apparently deep background: the symbol of ‘STRENGTH’ on the GH¢100, and ‘ONLY GOD’ symbol on the GH¢200.

The lower part of the stripe features the parliamentary mace on the GH¢100 and state sword on the GH¢200. When tilted these images appear to move.

Questions and Answers by BoG

Introduction of Higher Denomination Banknotes

1. Why has the Bank of Ghana introduced higher denomination?

Answer: High levels of inflation and currency depreciation in the past have eroded some of the gains from redenomination. The deadweight burden, reflected in high transaction cost has re-emerged. This set of higher denominations will address this increased transaction cost, especially in high-valued transactions in a cash based economy. Also, 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.

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.

2. What are the benefits of introducing these higher denominations?

Answer: Ensuring customer convenience; reducing high transaction cost; efficiency in high value transactions in cash; and reduces cost of printing as well as currency management including processing, transporting, and storing banknotes.

3. Will the new higher denomination banknotes lead to higher inflation?

Answer: No. Higher denomination is 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. Again, the value of currency depends on what you can buy with it, rather than what the face value is. Bank of Ghana will remain committed to preserving the purchasing power of the currency.

4. What will happen to the GH¢1 and GH¢ 2 banknotes?

Answer: The GH¢1 and GH¢2 banknotes remain legal tender

5. Will the new higher denomination banknotes also be a transaction note?

Answer: The GH¢100 will complement the existing high denomination banknotes to ease high value transaction. The GH¢200 banknote will be introduced gradually into circulation and will be in limited quantities.

6. Why has the Bank of Ghana introduced GH¢2 coins?

Answer: Bank of Ghana intends to gradually replace its lower banknotes denominations with coins to reduce its cost of printing. BoG will 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 develop infrastructures for coin usage.

7. Is the 1Gp still a legal tender?

Answer: The bank has no immediate plan of withdrawing the 1Gp from circulation.

8. How will the Bank of Ghana ensure that Ghanaians are aware of the security features of the new banknotes and coins?

Answer: There will be a nationwide educational campaign focused on the security features, proper handling of banknotes and promote usage of coins.

9. What is the need for higher denominations when other countries are moving towards the paperless mode of payments?

Answer: Introduction of higher denomination banknotes should not be misinterpreted to mean a shift away from the Central Banks policy of pursuing a cashless society and promoting the use of electronic modes of payments. The Bank of Ghana is rigorously pursuing paperless payment systems and recently implemented a regulatory framework for E-Payments and also introduced interoperability. These have enhanced growth in digital payments particularly growth in mobile money transfers and payments. More recently, the Bank announced exploration of issuing Central Bank Digital Currency. While vigorously pursuing financial inclusion by accelerating the migration to e-payment platforms, the bank is mindful of the relevance of cash in our day-to-day dealings. Undeniably, cash still remains the preferred medium of payment by the large informal sector in the country. This is why we continue to pay attention to enhancements in the structure, security features and management of cash within the economy.

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