Background
Effective 1 July 2007, the current currency of the country, the Cedi (¢), will be redenominated to the Ghana Cedi (GH¢), such that ten thousand Cedis will be equivalent to one Ghana Cedi. The re-denomination is not expected to affect the intrinsic value of the currency - “the value will be the same”. Two of the reasons given by the Central Bank for the re-denomination are the increasing difficulty in maintaining accounting and statistical records; and problems with accounting and data processing software. For most business enterprises, such an exercise is expected to result in significant cost savings on the one hand but some challenges on the other.
Re-Denomination
Financial Accounting
Technical Guidelines
In accordance with Section 41 (4) of the Bank of Ghana Act 2002, (Act 612), the Bank of Ghana hereby announces for the information of Banks, rural banks, savings and loans companies, other financial institutions and the general public the following guidelines on the implications of the re-denomination of the cedi as regards consumer pricing, exchange rate quotations, accounting systems and banking transactions.
Benefits of the Redenomination
Benefits
• Reduction in cost and overall risks of carrying large volumes of notes.
• Efficiency in payments systems, in particular, ATMs.
• Simplification of accounting records and the ease of expressing monetary values.
• Re-introduction of the culture of using coins in Ghana.
• Conversion of ¢5000 and below into coins would increase the efficiency of banknote processing systems and improve the overall quality of banknotes in circulation.
• Significant reduction in transactions volume.
• Facilitating the introduction of the use of vendor machines and car parking meters.
• Promoting tourists expenditures.
• Significant gains in cost of banknote production.
The Need for re-denomination
The current note regime places significant deadweight burden on the economy. This comes in several forms such as the high transaction costs at the cashiers, general inconvenience and high risks involved in carrying loads of currency for transaction purposes, increasing difficulties in maintaining bookkeeping and statistical records and ensuring compatibility with data processing software, and the strain on the payments system, particularly the ATMs.
