Cedi Depreciation: IEA Director Backs Prof Hanke’s Proposal For Currency Board To Save Struggling Currency

Cedi Depreciation: IEA Director Backs Prof Hanke’s Proposal For Currency Board To Save Struggling Currency

  • The Director of Research at IEA Dr John Kwakye has said Ghana stands a better chance of saving the cedi with a currency board
  • He said Prof Steve Hanke's constant proposal is worth considering and has urged managers of the economy to approach the proposal cautiously
  • Ghana's cedi is selling at GHS14 to $1, having lost over 45% of its value since January 2022 in what many economists have described the worst depreciation in Ghana's history

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A proposal by US-based applied economist Professor Steve Hanke for Ghana to scrap the central bank and set up a currency board to strengthen the cedi against the dollar is getting support.

Director of Research at the Institute of Economic Affairs (IEA), a civil society organisation, Dr John Kwakye, has said Prof Hanke’s proposal is worth considering.

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Dr Kwakye said a monetary system that is supervised a currency board is capable of bringing lasting stability to the local currency.

Kwakye cedi and Hanke
L-R: Dr John Kwakye, Ghana cedi notes and Prof John Kwakye. Source: UGC/Getty Image, B&FT.
Source: UGC

He warned, however, that in installing the board the managers must be proceed with tact.

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“I agree with Prof. Hanke that only a currency board-type monetary system can give the cedi lasting stability. We should, however, move progressively towards it. The full modalities can be worked out,” Dr John Kwakye told 3news.

Professor Hanke Wants Bank of Ghana Mothballed For A Currency Board

The John Hopkins University professor has consistently proposed that the country get rids of its central bank, the Bank of Ghana, and install a currency board.

He usually signs off his tweets about Ghana with the currency board suggestion.

He has done this so often that the proposal has gotten the attention of Ghanaians that who make up the over 522,000 people following him on Twitter.

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Economic crisis: Former President Mahama to address Ghanaians on state of economy on Thursday

Cedi Is Worst Performing Currency In The World

Meanwhile, YEN.com.gh has reported in a separate story that the Ghana cedi has recently been classified by Bloomberg as the worst-performing currency against the dollar.

Currently, the cedi is trading at above GH¢14 to a dollar at some forex bureaus.

From January to October 2022, the cedi has depreciated by 45.1% to the dollar, the worst among 148 currencies tracked by Bloomberg.

This means that the Ghana cedi has switched places with the Sri Lankan rupee, which is now the second worst performer.

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Source: YEN.com.gh

Authors:
George Nyavor avatar

George Nyavor (Head of Politics and Current Affairs Desk) George Nyavor writes for YEN.com.gh. He has been Head of the Politics and Current Affairs Desk since 2022. George has over 9 years of experience in managing media and communications (Myjoyonline and GhanaWeb). George is a member of the Catholic Association of Media Practitioners Ghana (CAMP-G). He obtained a BA in Communications Studies from the Ghana Institute of Journalism in 2010. Reach out to him via george.nyavor@yen.com.gh.

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