STOP DOLLARIZATION RESTRICTIONS BECAUSE IT IS FUTILE >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> I read this statement made by Dr. Bawumiah: Eminent economist Dr. Mahamudu Bawumia has said dollarization is not the cause of cedi depreciation but rather the effect of weak economic fundamentals and the loss of confidence in the local currency. At first glance, one might be tempted to jump to disagree but technically he is right on this, from the definition given to dollarization. if dollarization is the demand of the dollar to sustain domestic trade and commerce, then logically it is not the cause of the weakening of the local currency but the adverse effect, the consequence, the by-product of the weak currency. What is causing the preference of the demand for the dollar to the domestic currency, the cedi, is the primary cause of the dollarization of our economy ... this is common sense ... ... economic fundamentals are classically described as: `such economic measures as interest rates, the government’s budget deficit, the country’s balance of trade account (relating to exports and imports), the level of domestic business confidence, the inflation rate, the state of (and confidence in) the banking and wider financial sector and consumer confidence ability of wages to keep up with prices.` ... in fact, the effect of weak economic fundamentals cause the lack of confidence in the domestic tender, hence the increasing demand for a more secured currency as a safe haven, then ultimately the dollarization of our economy ... so any attempt to mop the floor instead of fixing the source of the leakage will be an exercise in futility. The faulty tap is the source of the leakage as the weak economic fundamentals The flow of the water as the lack of weakening of the cedi The flooded floor as the dollarization of the economy. So, you tell me the best approach to fix this crisis ...
Posted on: Wed, 02 Apr 2014 15:19:22 +0000
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