Bank of Ghana: Steve Hanke Says Central Bank Is Obsolete; Calls For Currency Board

Bank of Ghana: Steve Hanke Says Central Bank Is Obsolete; Calls For Currency Board

  • Economics professor Steve Hanke has hinted that Ghana is at a critical stage in its currency depreciation
  • The John Hopkins University professor said Ghana must retire the Bank of Ghana temporarily and install a currency board
  • The currency board would be expected to aggressively fix the exchange rate to hold the fall of the cedi against the dollar and other trading currencies

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As the Ghana cedi continues to tumble against the dollar, US economics professor, Steve Hanke, said the Bank of Ghana must be retired and replaced with a currency board.

Hanke and Akufo-Addo
Prof Steve Hanke (L) and Nana Akufo-Addo. Source: Getty Images.
Source: Getty Images

A currency board takes away the management of the exchange rate and money supply from a nation's central bank and institutes an extreme form of a pegged exchange rate.

Apart from fixing the exchange rate, a currency board becomes important to maintaining reserves of the underlying foreign currency.

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In a series of tweets on Sunday, the US-based economists lamented that under President Nana Akufo-Addo, things keep getting worse.

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"Sky-high food & fuel costs have triggered violent protests. Ghana must mothball its central bank, put it in museum, and install a currency board, NOW," he tweeted.

He also said although the government has averted a planned strike by many labour unions by agreeing to pay workers a 15% cost of living allowance, another wave of protests will soon happen again.

"The 15% increase was way too small to keep up with inflation, which I measure at 50%/yr. So, protests will soon reappear," Prof Hanke tweeted.

Akufo-Addo passes begging bowl to the IMF - Prof Hanke reported in a previous story that the US economics professor has thumbed down Nana Akufo-Addo's handling of the economy, suggesting that the president was begging for the IMF for help.

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He cited the decision to postpone the mid-year budget review this week as evidence that the president and his finance minister Ken Ofori-Atta were looking forward to a loan from the International Monetary Fund.

The finance minister postponed the review until initial meetings with the IMF for an economic programme were completed.

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