Not sure if I’m right but Ghana seems to be a net oil exporter but an importer of refined products (fuel). I think their oil is nationalized, again not sure about this. Essentially they could be swapping government oil (earning them US$) for fuel and making up the difference in gold priced in cedi. They seem to have lack of fuel + US$ an…
Not sure if I’m right but Ghana seems to be a net oil exporter but an importer of refined products (fuel). I think their oil is nationalized, again not sure about this. Essentially they could be swapping government oil (earning them US$) for fuel and making up the difference in gold priced in cedi. They seem to have lack of fuel + US$ and an abundance of gold and oil. What would be their best way out of the dilemma if my understanding is correct?
An interesting thesis....but even if that is the case merely making up the difference with gold does not achieve Ghana's stated objective of preserving USD reserves.
Ghana's better strategy would be to either a) seek PAYMENT for oil in gold (to reduce USD FX demands globally, which might even be plausible), or b) devise a way to require local Ghanian tax payments in gold (hopefully without triggering a monster liquidity crisis in the process--think Specie Circular of 1836), so that the government can accumulate gold reserves without printing/spending cedis, and thus goosing inflation in the process (which undermines the entire strategy).
Of course, strategy (a) pretty much puts Ghana on a trajectory to a sound money currency--and there's no way a country as corrupt as Ghana is going to tolerate anything but fiat currency.
Ghana is pretty interesting, never actually thought about them at all until your article. According to wiki:
In 2013, the Bank of Ghana began circulating the renminbi throughout Ghanaian state-owned banks and to the Ghana public as hard currency along with the national Ghanaian cedi for second national trade currency.
I wonder what the mix of cedi to renminbi is?
Maybe that’s why they don’t release their M1 & M2 supply figures?
I remember Croatia essentially having an unofficial two currency system (maybe still does) where all small transactions were in the local currency and any large transactions (cars and real estate) were in DM. I wonder if something similar happens in Ghana.
My thought is the “rich” may be virtually unaffected if they mostly transact in yuan and the “poor” bear the brunt as they are the ones transacting in cedi.
Thanks for the Specie Circular 1936 reference, I’d never heard of that before. Would be a good plan if they could pull it off, like you, I doubt they could given their level of corruption.
Thanks. I’m in Australia and have only vaguely heard about the Second Bank of the United States in passing, your reference helped me understand it bit more.
Not sure if I’m right but Ghana seems to be a net oil exporter but an importer of refined products (fuel). I think their oil is nationalized, again not sure about this. Essentially they could be swapping government oil (earning them US$) for fuel and making up the difference in gold priced in cedi. They seem to have lack of fuel + US$ and an abundance of gold and oil. What would be their best way out of the dilemma if my understanding is correct?
An interesting thesis....but even if that is the case merely making up the difference with gold does not achieve Ghana's stated objective of preserving USD reserves.
Ghana's better strategy would be to either a) seek PAYMENT for oil in gold (to reduce USD FX demands globally, which might even be plausible), or b) devise a way to require local Ghanian tax payments in gold (hopefully without triggering a monster liquidity crisis in the process--think Specie Circular of 1836), so that the government can accumulate gold reserves without printing/spending cedis, and thus goosing inflation in the process (which undermines the entire strategy).
Of course, strategy (a) pretty much puts Ghana on a trajectory to a sound money currency--and there's no way a country as corrupt as Ghana is going to tolerate anything but fiat currency.
https://www.transparency.org/en/cpi/2021/index/gha
(Sound money, like karma, can be quite the b*tch at times!)
Ghana is pretty interesting, never actually thought about them at all until your article. According to wiki:
In 2013, the Bank of Ghana began circulating the renminbi throughout Ghanaian state-owned banks and to the Ghana public as hard currency along with the national Ghanaian cedi for second national trade currency.
I wonder what the mix of cedi to renminbi is?
Maybe that’s why they don’t release their M1 & M2 supply figures?
I remember Croatia essentially having an unofficial two currency system (maybe still does) where all small transactions were in the local currency and any large transactions (cars and real estate) were in DM. I wonder if something similar happens in Ghana.
Against the yuan the cedi is doing about the same as against the dollar.
https://www.xe.com/currencycharts/?from=GHS&to=CNY&view=10Y
https://www.xe.com/currencycharts/?from=GHS&to=CNY&view=10Y
China has not been a good friend to Ghana, financially speaking.
My thought is the “rich” may be virtually unaffected if they mostly transact in yuan and the “poor” bear the brunt as they are the ones transacting in cedi.
Thanks for the Specie Circular 1936 reference, I’d never heard of that before. Would be a good plan if they could pull it off, like you, I doubt they could given their level of corruption.
Specie Circular was 1836. It was Andrew Jackson's declaration of war on bank notes (paper money).
It triggered the Panic of 1837, America's very first economic collapse.
Thanks. I’m in Australia and have only vaguely heard about the Second Bank of the United States in passing, your reference helped me understand it bit more.