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04.04.2007 General News

BOG Manager defends currency redenomination

By GNA

Eugene Atikpo, Brong-Ahafo Regional Manager of Bank of Ghana on Wednesday, April 4, 2007, dismissed the claim that the redenomination of the cedi would be a waste of state resources if the proposed West African common currency, Eco, is introduced.

He said the New Ghana Cedi “will rather realign our currency with those of other ECOWAS member states”.

The BOG Regional Manager stressed; “it will be expedient for a bicycle owner to keep maintaining the bicycle until a promised motor car is delivered”.

Mr. Atikpo explained that the problems associated with the current note regime including transaction costs and general inconvenience and high risks of carrying loads of currency, were results of significant inflation and currency devaluation in the past.

Other problems, the BOG regional manager said are difficulties in maintaining book-keeping and statistical records, problems with accounting and data processing software and the strain on the payments system like ATM withdrawals.

Mr. Atikpo stated that historical analysis had shown that redenomination of currencies had been very successful in an environment of macroeconomic stability that had declining inflation, stable exchange rate, fiscal prudence and stable currency.

“This is the case of Ghana as of now, which compares favourably with countries like Brazil, Argentina, Mexico and Turkey that have successfully gone through such a programme”, he stated.

The regional manager noted that, “in the absence of these factors, zeros removed often find their way back into the system, then benefits of redenomination become illusive and credibility is lost”.

Source: GNA

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