IEA: BoG’s Gold Coin initiative won’t solve underlying economic issues

The Institute of Economic Affairs (IEA) has raised concerns about the Bank of Ghana’s newly introduced Ghana Gold Coin (GGC), intended to enhance savings and boost liquidity in financial markets.

The IEA argues that positioning the GGC as a dollar alternative indirectly acknowledges economic challenges leading Ghanaians to favor foreign currencies over the cedi.

The IEA suggests that instead of promoting the GGC, the central bank should address the root causes of dollar demand, like economic instability.

The report questions the liquidity management claims of the GGC initiative, noting that buying and selling the coins results in zero net liquidity withdrawal.

The IEA recommends that the Bank of Ghana tackle cedi depreciation directly by implementing fiscal and monetary discipline, lowering inflation, and addressing foreign exchange supply-demand imbalances through structural reforms.