He said prices of goods of lower categories such as water will shoot up as a result of the development.
“For me, I think it has the tendency of causing inflation because when you are pricing, you will look at the minimum and what is convenient to handle and at the end of the day, the lower categories of consumption like water and others will start shooting up. The inflation that we have been struggling for it to come down over the years, we will end up going up again,” Dr. Mensah noted in a Citi News interview.
The Bank of Ghana has indicated that the introduction of the new denominations will not cause inflation.
The BoG in addressing some frequently asked questions on the development on its website said it is committed to preserving the purchasing power of the currency.
“Higher denomination is introduced to only ease high transaction volumes. These notes will only replace some of the large cash transactions done with the existing GH¢50 and GH¢20 banknotes. Again, the value of currency depends on what you can buy with it, rather than what the face value is. Bank of Ghana will remain committed to preserving the purchasing power of the currency,” the BoG said.
The Governor, Dr. Ernest Addison, who announced the introduction of the new denominations at a press conference on Friday said the Central Bank went through a thorough thinking process before arriving at the decision.
He said the Bank of Ghana consulted broadly and conducted a survey that indicated a demand for the higher denomination of banknotes.
“In March 2017, Bank of Ghana began a process of conducting a thorough review of the structure of the currency including the note, coin boundary, and acceptability and use of the individual currency series,” the BoG Governor said, adding that the process involved a nationwide survey with market operators, businesses and “international stakeholders as well as some empirical exercise,” he noted.