New higher banknotes not a threat to inflation - Financial expert

Nana Otuo Acheampong, a financial and banking expert, says the introduction of higher banknotes would not threaten inflation fluctuation, but would rather ease high value business transactions.

He said inflation was the change in the purchasing power of money and introducing higher denominations would not change the purchasing power of the currency or prices of goods and services but just using higher denomination to buy items.

“The incidence of inflation relative to higher denominations does not have any link at all,” he said.

Mr Acheampong said this in an interview with the Ghana News Agency, in analysing the socio-economic implications for releasing higher denomination banknotes into the economy.

Dr Ernest Yedu Addison, Governor of the Bank of Ghana (BoG) on November 29, announced the introduction of new GH¢100.00 and GH¢200.00 banknotes to complement the existing series.

The move, the Governor said, was to ensure customers’ convenience, facilitate easy transaction for high value business transactions and reduce the cost of printing the currency.

Asked whether the introduction of higher banknotes was necessary, Nana Acheampong answered in the affirmative, explaining that when there is an expanded economy, it is imperative to introduce higher denominations to facilitate high-value transactions.

 He said small currency denominations often resulted in “dead weight loss” syndrome in the economy.

Commenting on the recent Afrobarometer survey that revealed that 59 per cent of Ghanaians have the perception that government was not steering the economy in the right direction, Nana Acheampong entreated government to appreciate the value of divergent views and re-strategise.

“In banking there is a “Code to mine in complaints” and so anytime anyone complains, it means something is not right, government should take it in good faith and correct the things that are not right,” he said.

Nana Acheampong said the government was doing well in terms of the macroeconomic indicators and social interventions like the Free Senior High School Policy.

 He said it would take time for the government’s policies on the macro-economy to be translated into physical cash and urged the public to be patient with the government. —GNA

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