Bank of Sierra Leone Announces Re-domination of Leones Currencies
The Bank of Sierra Leone, Professor Kelfala Kallon has announced plans to re-dominate the country’s legal tender, Leones.
In a statement, Kelfala said this decision is taken pursuant to Section 30 of the Bank of Sierra Leone Act 2019.
Official sources say the re-domination will taken effect in November 2021 and the last three zeros (0) will be removed from the face value of the current legal tender.
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What is Currency redenomination?
Currency redenomination is the process where a new unit of money replaces the old unit with a certain ratio. It is achieved by removing zeros from a currency or moving some decimal points to the left, with the aim of correcting perceived misalignment in the currency and pricing structure, and enhancing the credibility of the local currency.
How will the Leones be redenominated?
It is by dropping three zeros from the currency or moving three decimal places to the left. The name of the currency will still be the Leones. This will also see the introduction of coins For example, the following equivalents will obtain as we re-denominate:
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Le500 will become 5Cent
Le1,000 will become Le1
Le5,000 will become Le5
Le10,000 will become Le10
What are the Benefits of the Re-denomination?
● Promoting a more efficient payments system and de-congesting banking halls. So, Instead of withdrawing Le50,000, Le50 of the re-denominated Leones will command exactly the same value.
● Re-denomination reduces the risks associated with carrying large physical cash because one can carry little denominations with more value.
● Discouraging currency substitution and addressing the perception that the domestic currency is weak despite its stability.
● Reducing the cost of printing, distribution and processing of currency
Which other countries have successfully redenominated their currency?
Nigeria (2008), Ghana (2007), Croatia (1994)