New BoG chair proposes gold-backed system to stabilise cedi
By Praisebell Rosemond Larbi
Prof. Yegandi Imhotep Paul Alagidede, the newly appointed Bank of Ghana (BoG) Chair in Finance and Economics at the University of Ghana, has proposed a bold framework for stabilising the Ghanaian cedi by anchoring it to strategic national resources such as gold, cocoa and other high-value commodities.
Delivering his inaugural lecture at the University of Ghana, Legon, Prof. Alagidede argued that Ghana’s unique position as Africa’s leading gold producer, coupled with its globally recognised cocoa industry, presents a viable pathway towards building a multi-resource-backed monetary system.
This, he maintained, could offer the cedi greater resilience against speculative attacks and macroeconomic instability.
“Ghana’s dominant position in gold production, ranking first in Africa, provides a strong foundation for an exchange rate and banking system partially backed by gold. In addition, Ghana’s cocoa exports, which remain globally significant, and its untapped bauxite reserves allow for a multi-resource collateral system. A gold-backed digital currency, monitored by the central bank and audited through blockchain technology, could stabilise the Ghanaian cedi while enhancing public trust,” Prof. Alagidede stated.
The economist explained that such a system would not necessarily require a complete return to the historical gold standard but rather a partial commodity-backing that complements modern monetary frameworks.
In his view, the approach would diversify the monetary base, provide a more stable store of value and help shield the cedi from volatile swings in global currency markets.
In Sync with Existing Initiatives
Prof. Alagidede’s recommendations align with recent initiatives undertaken by the Bank of Ghana, most notably the Gold for Oil and Gold for Reserve programmes. These policies sought to leverage Ghana’s gold reserves to reduce foreign exchange demand for fuel imports and to shore up the cedi against depreciation pressures.
Advocates of resource-backed strategies point to the relative exchange rate stability achieved during periods when such programmes were actively implemented. By reducing reliance on the US dollar for critical imports, they argue, Ghana can mitigate the cyclical shortages of foreign currency that have historically triggered sharp depreciations of the cedi.
Central Bank’s Perspective
At the lecture, both the Governor of the Bank of Ghana, Dr Johnson Asiama, and the Bank’s Head of Research, Dr Philip Abrado-Otu, acknowledged the stabilising influence of the Gold for Reserve programme on the domestic currency.
They noted that while resource-backed approaches are not a silver bullet for all economic challenges, they can play a significant role in a broader stability framework that includes prudent fiscal management, monetary discipline and structural reforms.
Research, Policy and Industry Collaboration
During his tenure as the Bank of Ghana Chair in Finance and Economics, Prof. Alagidede will focus on research that bridges academic theory and practical policy. His mandate includes conducting joint studies with the Bank of Ghana, developing grant proposals, publishing policy-relevant research, teaching and supervising graduate students, and fostering stronger linkages between the University of Ghana Business School, the Department of Economics and the financial services sector.
Prof. Alagidede emphasised that successful implementation of a resource-backed currency system would require robust governance structures, transparent resource valuation mechanisms and strong institutional oversight. Modern technology, such as blockchain auditing, could ensure accountability and bolster public trust in the system.
A Long-Term Vision for Currency Stability
Prof. Alagidede concluded that while short-term measures like interest rate adjustments and market interventions can provide temporary relief, Ghana must adopt a longer-term vision anchored in its comparative advantages.
By integrating the country’s gold, cocoa and bauxite into its monetary strategy, he argued, Ghana could reduce external vulnerabilities, attract investment and create a more predictable economic environment for businesses and households alike.
“This is about building a currency system that reflects the wealth we have beneath our feet and in our fields. It is about making the cedi not just a medium of exchange, but a representation of Ghana’s enduring economic strength,” he added.
