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Business News of Tuesday, 10 December 2019

Source: Isaac Boafo

Bank of Ghana’s new 100, 200 cedi note is fraud - Ricketts-Hagan

Kweku Ricketts-Hagan Kweku Ricketts-Hagan

A member of Parliament for Cape Coast South and a former deputy minister of finance, Kweku Ricketts-Hagan has said that the printing of the new 100 and 200 cedi note by the Bank of Ghana(BoG) can be interpreted as fraudulent, as there is no justification in terms of economics or otherwise for[ introducing it.

He alleged that, in an economy where the Government says inflation is going down and even boasting of a single digit inflation, cannot justify introducing high value denomination.

He said, “The introduction of high denomination generally suggest that inflation is rising but that is not the case there, according to the government’s own recent budget.”

He also said, “When you are talking about a digital and cashless economy you cannot by the same breath go backwards and introduce higher denominations of the currency. That is definitely taking a step back from your objective of achieving a cashless economy. The two actions are incompatible and counterproductive.”

The country’s aim is to reduce the use of physical cash to settle transactions in the economy, the same economy is promoting higher denominations to make it easier to use physical cash to settle transactions?that is senseless.

Speaking on Hot 93.3 FM, the lawmaker was wondering whether the bank of Ghana is working with the government to achieve a cashless economy or against it. If BoG and government are saying that these higher notes are not for the market traders but rather people who are higher up the economic food chain, then it’s wrong and a complete waste, because high net worth individuals and businesses who do high value transactions usually use the banking system.

“I can tell you that the people who will end up using the new notes are individuals who are going print their own counterfeit money, people who are laundering money, and people who will be looking at cleaning bribe monies through legal transactions. All these illegal activities will end up raising inflation and increase insecurity in the country.”

This government and BoG have collapsed banks unnecessary with GHS 16 billions of tax payer’s money and still asking for more money with no ending in site. They have caused job losses, created ill-capitalized and insolvent banking system. And now, as if they have not done enough damage to the banking system, printing of these new higher notes will eventually make the banking system illiquid and create an adverse effect in access to financing. . These new notes will make it easier to keep money than take money to the banks, therefore reducing bank deposits in the medium term that will mean less lending to the public and that will affect banks ability to manage money supply and create a liquid economy.

The idea that the new notes will help shore up the value of the cedis by reducing inflation further, is an economic illusion by the managers of the economy. BoG needs to understand that there is a difference between the causes of inflation and the impact of inflation if there is one. You can use higher denomination as a remedy to cure the inconvenience of the impact of inflation by reducing the number of notes you carry and transact with, but it’s not a remedy to resolve the causes of inflation. The daily minimum wage is nearly 12 cedis now, which means that the lowest earner in the economy gets around 240-300 cedis a month ? so with the new notes, such a hard working citizen can be given 2 pieces of this new notes of 100 and 200 cedis, the value may be the same but psychologically demoralising. If this hard working individual is buying 2 balls of kenkey for lunch and he has 200 cedis, there may be challenges with the kenkey seller getting a change back for him. This is not going to create the customer convenience that the BoG is talking about but rather a nightmare.

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