As the Bank of Ghana (BoG) launched its Ghana Gold Coin initiative aimed at curbing cedi depreciation and reducing dollar hoarding, economist Professor Godfred Bokpin has expressed skepticism about the initiative’s effectiveness. According to Professor Bokpin, while the gold coin offers an alternative investment avenue, it is not a comprehensive solution to the persistent decline of the cedi.
The Bank of Ghana’s Ghana Gold Coin Initiative
On Friday, September 27, the BoG unveiled the Ghana Gold Coin, an initiative under its domestic gold programme. The aim of this programme is to absorb excess liquidity in the market, reduce reliance on the U.S. dollar, and strengthen the local currency. The coins will be made available in three denominations—one-ounce, half-ounce, and quarter-ounce—and sold through commercial banks in the coming weeks.
Governor Dr. Ernest Addison of the BoG announced during the Monetary Policy Committee (MPC) meeting that the prices for the coins would be regularly updated on the BoG’s website.
Professor Bokpin’s Skepticism
Despite the optimistic goals set by the BoG, Professor Bokpin believes that the gold coin is not a sufficient remedy for the structural challenges facing the cedi. In an interview with Citi FM’s Eyewitness News, he remarked:
“While I acknowledge the central bank’s efforts, this initiative alone is not the solution to the cedi’s depreciation. The market’s confidence issues are not fully addressed by this.”
Bokpin went on to argue that while the gold coin presents an investment alternative, it does not tackle the core economic issues contributing to the cedi’s depreciation, such as:
- Fiscal discipline
- Over-reliance on imports
- Limited value addition to exports
The Role of Economic Management in Cedi Stability
Professor Bokpin further emphasized that the introduction of the gold coin should not be seen as a substitute for sound economic management. He pointed out that managing the economy effectively, enhancing local production capacity, and reducing dependence on imports are fundamental to stabilizing the currency.
“The factors driving the cedi’s decline are deeply tied to how the economy is being managed. Without addressing these underlying issues, such initiatives, while helpful, are not the ultimate solution,” he explained.
Conclusion
While the Ghana Gold Coin provides an interesting alternative to dollar hoarding and offers a unique investment opportunity, experts like Professor Bokpin argue that it is not a long-term solution for the cedi’s depreciation. The initiative is a welcome addition, but more comprehensive economic reforms are necessary to address the currency’s challenges.
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