The Institute of Economic Affairs (IEA) has expressed concerns over the rising trend of dollar hoarding among Ghanaians and its contribution to the depreciation of the cedi.
In its bi-monthly Economic Outlook report for September-October, the IEA urged the Bank of Ghana (BoG) to focus on addressing the fundamental causes of the cedi’s decline rather than relying on the Ghana Gold Coin (GGC) as a solution.
The IEA called for stronger fiscal and monetary policies to ease pressure on the cedi, emphasizing that this approach would not only stabilize the currency but also reduce the incentive for Ghanaians to hoard dollars.
The report stresses that through disciplined economic management, the BoG could restore public confidence in the cedi and reduce the allure of holding foreign currency.
“We urge the Bank to address the root causes of the cedi’s depreciation and the growing trend of Ghanaians holding dollars, rather than relying on the GGC,” the IEA stated.
The required measures, the IEA suggests, should include maintaining fiscal and monetary discipline to ease pressures on the cedi, reducing inflation to close the gap with trading partners, and addressing the persistent foreign exchange (FX) demand-supply gap through appropriate structural reforms.
The IEA has also questioned the BoG’s decision to introduce the Ghana Gold Coin (GCC) as an alternative asset to the US dollar, suggesting it may reflect a failure to address underlying economic issues.
“We are puzzled as to why the Bank would offer an alternative asset like the GCC instead of tackling the real reasons Ghanaians prefer holding dollars, such as high inflation, persistent economic crises, and lack of confidence in the economy,” the IEA stated.
The Bank of Ghana unveiled the Ghana Gold Coin on Friday, September 27, as part of its domestic gold program.
The initiative aims to absorb excess liquidity in the market and strengthen the local currency against major trading currencies.
The coin will be available in three denominations: one ounce, half ounce, and quarter ounce, and will be sold in commercial banks within two weeks.
