New Cedi notes could lead to higher inflation-Chartered Economist
Chartered Economist Mr. Emmanuel Amoah Darkwa has said they are both advantages and disadvantages when a new denomination is introduced.
He said the possibility of higher inflation is high when new domination is introduced.
The economist told Nyankonton Mu Nsem on Rainbow Radio 87.5Fm that although these are early days yet, the new dominations could lead to higher inflation.
He said prices of goods of lower categories will shoot up as a result of the development.
The Governor, Dr. Ernest Addison, who announced the introduction of the new denominations at a press conference on Friday said the Central Bank went through a thorough thinking process before arriving at the decision.
He said Ghana should be looking at the cashless economy rather than introducing higher dominations.
He said in one breath, you may defeat the purpose of the cashless economy and vice versa due to the informal way of doing business in Ghana.
When asked if the timing was good, he said that could be argued on different points saying based on our macroeconomic stability one could say it is not bad timing.
However, we are heading into an election year and people are also worried.
Meanwhile, the BoG has disagreed that the introduction of the higher denomination could lead to higher inflation.
In a question answer statement issued by the central bank it said: ”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.”
By: Rashid Obodai Provencal