The Institute of Economic Affairs (IEA) has raised concerns over the Bank of Ghana’s recently launched Ghana Gold Coin (GGC), questioning its effectiveness in tackling the country’s reliance on the U.S. dollar.
Despite the central bank’s claims that the GGC will encourage savings and improve liquidity in financial markets, the IEA argues that the initiative sidesteps underlying economic issues driving dollar demand.
Unveiled on September 27 as part of the Bank of Ghana’s domestic gold programme, the GGC was introduced as a gold-backed asset intended to stabilize the cedi against major foreign currencies.
However, the IEA’s latest report casts doubt on the impact of the coin, suggesting that the central bank should address more pressing economic challenges like inflation and fiscal imbalances instead.
“Offering the GGC as an alternative asset to the dollar seems to be an admission of failure to deal with the real problems facing the economy, which drives Ghanaians to hold dollars instead of cedis,” the report asserts.
The IEA also disputed the Bank’s claims about the GGC’s role in managing liquidity, noting that “the Bank is expected to buy gold from miners with cedis… [and] the sale of GGCs back to Ghanaians in exchange for those same cedis injected into the economy ultimately results in zero liquidity withdrawal.”
According to the IEA, deeper reforms are needed to reduce the demand for foreign currency, emphasising that “the Bank should focus on dealing with the fundamental causes of the cedi depreciation.”
The report urges measures such as enforcing fiscal and monetary discipline to ease pressure on the cedi, narrowing the inflation gap with trading partners, and addressing foreign exchange imbalances through structural reforms.
