According to the Central Bank, high levels of inflation currency depreciation in the past have eroded some of the gains from redenomination.
It says the deadweight burden, reflected in high transaction cost has re-emerged.
This set of higher denominations will address this increased transaction cost, especially in high-valued transactions in a cash based economy.
It added that also the structure of the Banknotes denomination has changed resulting in a shift in demand for higher denominations (GH¢50 and GH¢ 20 account for about 70℅ of the total demand), reflecting the expansion in income and prices.
“The introduction of the higher value denominations in circulation are therefore necessary to ensure customer convenience, reduction in the costs of printing and other currency management processes,” the Bank stated.
Benefits of introducing the higher denominations
According to the Bank, ensuring customer convenience, reducing high transaction cost; efficiency in high value transactions in cash; reduction of cost of printing as well as currency management including processing, transporting, and storing banknotes, are some of the benefits that come with the introduction of the new notes.
Will The Higher Denomination Banknotes Lead To higher inflation?
The Bank indicated that the introduction of the new notes will not lead to higher inflation.
It says higher denomination is introduced to only ease high transaction volumes.
“These notes will only replace some of the large cash transactions done with the existing GH¢50 and GH¢20 banknotes,” it explained, adding that “again, the value of currency depends on what you buy with it, rather than what the face value is.
Will the new denomination banknotes be a transaction note?
According to the Central Bank, the GH¢100 will complement the existing high denomination banknotes to ease high value transaction.
It says the GH¢ 200 banknote will be introduced gradually into circulation and will be in limited quantities.
Why has BoG Introduced GH¢2 Coins?
The Bank says it intends to gradually replace its lower banknotes denominations with coins to reduce its costs of printing.
It says it 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 develop infrastructures for coin usage.
There will be a nationwide educational campaign focused on the security features, proper handling of banknotes and promote usage of coins, according to the bank.