Ghana Launches Gold Coin Priced in Local Currency
Ghana's central bank has introduced a gold coin aimed at boosting domestic savings and managing liquidity within the financial system. The gold coins, refined to 99.99% purity, will be priced based on the London Bullion Market Association (LBMA) auction price. The coins will be issued in denominations of one ounce, half an ounce, and a quarter ounce.
The initiative is part of the Bank of Ghana's (BOG) strategy to enhance the demand for the Ghanaian cedi and provide residents with an additional investment avenue. According to BOG Governor Ernest Addison, the gold coin will help the bank manage excess liquidity in the banking sector and will complement the bank’s existing liquidity management tools, such as treasury bills. “The Ghana gold coin enables the Bank of Ghana to mop up excess liquidity in the banking sector and will supplement the bank’s bills for liquidity management,” Addison stated. He emphasized that the coin offers residents a chance to invest and benefit from the BOG’s domestic gold purchase program.
The launch of the gold coin comes amid ongoing challenges for the Ghanaian economy, particularly the depreciation of the cedi against the U.S. dollar. Despite efforts to strengthen the currency, including the introduction of a “gold for oil scheme” in late 2022, the cedi has continued to weaken. Under this scheme, the BOG required large gold producers to sell their gold to the bank at a 20% discount, which has led to the acquisition of 65.4 tons of gold valued at approximately $5 billion.
However, the cedi's exchange rate has faced significant pressure, particularly following reports in June that Ghana's cocoa production would fall short of initial projections by nearly half. This news contributed to a decline in the cedi's value, highlighting the ongoing economic challenges facing the country.
The introduction of the gold coin represents a strategic move by the Bank of Ghana to encourage domestic savings and provide a stable investment option for residents. While the initiative aims to bolster the cedi and manage liquidity, the ongoing depreciation of the currency underscores the complexities of Ghana's economic landscape. As the gold coins become available, their impact on the financial system and the broader economy will be closely monitored.
