The Institute of Economic Affairs (IEA) has raised concerns about the growing trend of dollar hoarding among Ghanaians and its impact on the cedi’s depreciation.
In its bi-monthly Economic Outlook report for September-October, the IEA urged the Bank of Ghana (BoG) to address the root causes of the Cedi’s decline rather than rely on the Ghana Gold Coin (GGC) as a solution.
The IEA recommended that BoG adopt stronger fiscal and monetary policies to relieve pressure on the cedi, arguing that this approach would not only stabilize the currency but also reduce the incentive for citizens to hoard dollars.
The report highlights that by focusing on disciplined economic management, BoG can help restore public confidence in the cedi and lessen the appeal of holding foreign currency.
“We urge the Bank to focus on dealing with the fundamental causes of the cedi depreciation and the growing appetite of Ghanaians to hold dollars instead of resorting to the GCC.
“The required measures should include: maintenance of fiscal and monetary discipline to reduce pressures on the cedi, reduction of inflation to close the gap with trading partners and addressing the persistent FX demand-supply gap through appropriate structural reforms.”
The Institute of Economic Affairs is questioning the Bank of Ghana’s move to introduce the Ghana Gold Coin (GCC) as an alternative asset to the US dollar.
The IEA sees this as an admission of failure to address the underlying economic issues, rather than tackling the root causes of why Ghanaians prefer holding onto the dollar.
This approach, according to the IEA, doesn’t address the fundamental problems facing the economy.
“We are wondering why the Bank will offer an alternative asset to Ghanaians to hold with the hope of easing pressure on the dollar instead of finding a solution to the reasons why Ghanaians prefer to hold the dollar instead of the cedi, which includes high inflation, persistent
economic crisis and lack of confidence in the economy.
“Offering the GCC as an alternative asset to the dollar seems to be an admission of failure to deal with the real problems facing the economy, and which drive Ghanaians to hold dollars instead of cedis.”
The Bank of Ghana (BoG) on Friday, September 27, unveiled the Ghana Gold Coin, a new investment initiative aimed at reducing dollar hoarding.
As part of the domestic gold programme, this initiative seeks to absorb excess liquidity in the market and strengthen the local currency against major trading currencies.
The coin will be available in three denominations: a one-ounce coin, a half-ounce coin, and a quarter-ounce coin, and will be sold in commercial banks within two weeks.
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