The African nation Ghana is looking to back its local currency, the Cedi with gold. Ghana’s Vice President Mahamudu Bawumia pledged to back the Cedi with gold to solve the nation’s instability issue. The policy is yet to be implemented and could usher the country into a new era of monetary standards. Backing their currency with the gold standard comes straight out of the BRICS playbook where the alliance is looking to end reliance on the US dollar.
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Read here to know how many sectors in the US will be affected if BRICS ditches the dollar for trade. Ghana is now following the footsteps of the de-dollarization initiative to help its local currency get back on track.
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BRICS: Economist Question Ghana VP’s Idea of Backing Cedi With Gold
All that glitters is not gold and economists are questioning Ghana VP’s decision to back the Cedi with gold. The BRICS ideals of putting the US dollar in the back seat and using gold and local currencies is not a solution for all countries. Richmond Atuahene, A Ghanaian banking consultant has expressed concerns about Bawumia’s pledge to back the local currency with gold. He expressed his displeasure with the idea saying that backing the Cedi with gold will not solve Ghana’s instability issues.
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“The gold standard’s success in Ghana hinges on the government’s commitment to a stable and viable economy. Without addressing the weaknesses in macroeconomic stability, adopting a gold standard could limit monetary policy flexibility and exacerbate economic instability,” Atuahene explained. Therefore, the BRICS de-dollarization initiative is not a cup of tea for every country as each economy is different.
Even BRICS is planning to back their yet-to-be-released currency with gold to challenge the US dollar. However, a solid decision is yet to be taken about the development and formation of the currency.