The Bank of Ghana says the new GH¢100 and GH¢200 notes to be issued will be limited in circulation as it will be restricted to high-value transactions and will not be dispensed by (Automated Teller Machines) ATMs.
The central bank justifying its decision to introduce the higher denominations explained that the structure of banknotes denomination has changed resulting in a shift in demand for higher denominations (GH¢50 and GH¢20 accounts for about 70% of the total demand), reflecting the expansion in income and prices.
“Introduction of the higher value denominations in circulation is, therefore, necessary to ensure customer convenience, reduction in the costs of printing and other currency management processes. The notes will also address the deadweight burden on the economy from past inflation and cedi depreciation,” the Bank said in a set of Frequently Asked Questions (FAQs).
1. Why has the Bank of Ghana (BoG) introduced higher denomination?
Answer: To address the deadweight burden on the economy from past inflation and cedi depreciation. Also, the structure of the denomination of the banknote has changed resulting in a shift in demand for higher denominations (GH¢50 and GH¢20 accounts for about 70% of the total demand), reflecting the expansion in income and prices. Introduction of the higher value denominations in circulation is, therefore, necessary to ensure customer convenience, reduction in the costs of printing and other currency management processes.
2. What are the benefits of introducing these higher denominations?
Answer: Ensuring customer convenience; efficiency in high-value transactions in cash; and reduces the cost of printing as well as currency management including processing, transporting, and storing banknotes.
3. Will the new higher denomination banknotes lead to higher inflation?
Answer: No. The higher denomination is introduced to only ease the high transaction. These notes will only replace some of the large cash transactions done with the existing GH¢50 and GH¢20 banknotes. Again, the value of a currency depends on what you can buy with it, rather than what the face value is. Bank of Ghana will remain committed to preserving the purchasing power of the currency.
4. What will happen to the GH¢1 and GH¢ 2 banknotes?
Answer: The GH¢1 and GH¢2 banknotes remain legal tender
5. Why has the Bank of Ghana introduced GH¢2 coins?
Answer: Bank of Ghana intends to gradually replace its lower banknotes denominations with coins to reduce its cost of printing. BoG will also embark on a vigorous campaign among road transport workers, market operators, small businesses, supermarkets, vendors and others to create avenues for the usage of the coins including developing infrastructures for coin usage.
6. Is the 1Gp still a legal tender?
Answer: The bank has no immediate plan of withdrawing the 1Gp from circulation.
7. Are the new higher denominations going to be in the ATMs?
Answer: No. The circulation of the higher denomination banknotes is intended to be minimal.
8. How will the Bank of Ghana ensure that Ghanaians are aware of the security features of the new banknotes and coins?
Answer: There will be a nationwide educational campaign focused on the security features, proper handling of banknotes and promote usage of coins.
9. What is the need for higher denominations when other countries are moving towards the paperless mode of payments?
Answer: Introduction of higher denomination banknotes should not be misinterpreted to mean a shift away from the Central Banks policy of pursuing a cashless society and promoting the use of electronic modes of payments. The Bank of Ghana is rigorously pursuing paperless payment systems and recently implemented a regulatory framework for E-Payments and also introduced interoperability. These have enhanced growth in digital payments particularly growth in mobile money transfers and payments. More recently, the Bank announced exploration of issuing Central Bank Digital Currency. While vigorously pursuing financial inclusion by accelerating the migration to e-payment platforms, the bank is mindful of the relevance of cash in our day-to-day dealings. Undeniably, cash still remains the preferred medium of payment by the large informal sector in the country. This is why we continue to pay attention to enhancements in the structure, security features and management of cash within the economy.