Dr. Ernest Addison, the Governor of the Bank of Ghana, has indicated that the GHC 1 and GHC 2 notes will be phased out of circulation soon.
On Monday, September 27th, he mentioned this at the 102nd Monetary Policy Committee (MPC) press conference in Accra.
“Both the GHC1 and GHC2 notes will eventually be phased out since they are not cost-effective in terms of printing costs,” Dr. Addison added.
“These are extensively circulated notes that come back ripped and filthy, making it impossible for our currency processing machinery to process them…”
“We have bales and bales of GHC1 notes that we are unable to process,” he added. So, in the long run, the plan is to abandon the GHC1 and GHC2 notes in favor of the GHC1 and GHC2 coins. This note [GHC2] was issued as a commemorative note, as you may recall… Commemorative notes aren’t meant to be kept on hand.
“As a result, in the last two years, we’ve introduced the GHC2 coin. You’d think it’d eventually fill the same role as the GHC2 note does.”
In terms of the local currency’s performance, he stated that the Ghana Cedi has done well, with a year-to-date depreciation of 1.8 percent.
Foreign investor behavior has not changed as a result of the country’s greater sovereign spread, as net monthly purchases of securities on both the debt and equities markets remain generally favorable.
“Rising interest rates in advanced economies as a result of tapering may pose some dangers in the future.
“However, in the short term, the substantial reserve build-up and foreign exchange inflows from the latest SDR allocation, as well as expected syndicated cocoa loan revenues, should help to buffer currency pressures.”