The Government of Sierra Leone on Wednesday August 11 2021, announced a redenomination of the country’s currency at a press conference witnessed by representatives from various commercial banks and other financial institutions operating in the country.
He made this disclosure at the Bank Complex at Kingtom in Freetown emphasizing his intention is to remove three zeroes (Le,000) from the Leones in a scheme that would entail a de-nomination and the printing of new currency which he called the “New Leone.”.
“When I took up office, one of the first things I had in mind was to re-denominate, but I could not have achieved that at a time when there was rampant inflation in the country, and fiscal indiscipline, and I had to put all of those things in check before I believe that the time was ripe for me to do so,” he disclosed.
As per law, the Bank of Sierra Leone is expected to give three months notice to the populace with regards the introduction of the new currency. In that light, Prof. Kallon has asked that the old currency be made available within this three month notice.
Explaining his reason for the de-nomination, he said “I charter aeroplane to bring the Leones home, but most times it disappears within the shortest possible time, and we don’t really know what happens to it. We certainly (cannot) continue with this, so those who know that they have kept the Leones should bring it,” he said.
The Governor argued that the country spends too much money in printing the country’s currency because of what he described as over-sized disclosing that the size of the “New Leone” will be smaller and will be in conformity with international standards.
He added that the country’s current currency is too big for transaction purposes. “People find it difficult to carry the current Leone in their wallet. However, in a bid to prevent people from getting confused, the color and design will be the same” he said.
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Explaining the removal of the three zeroes, Prof. Kallon said a new one Leone (Le1) will be brought into circulation and it will be equivalent to the current one thousand Leones (Le1,000), whereas, a new two Leone (Le2) will replace the current two thousand Leones (Le2,000), whiles the new five Leone (Le5) will replace the current five thousand Leones (Le5,000), the sum of 10 Leones (Le10) will replace the current ten thousand Leones (Le10,000), and then the new sum of 20 Leones (Le20) will be equivalent to twenty thousand Leones (Le20,000).
He stated that the “New Leones” will have the same value as the current Leones. “What determines the value of a currency is the productivity of the people of the country. When you re-denominate, people feel psychologically that their money has value, so they are going to behave in a way that the currency will be appreciated,” he said.
Key among the benefit of what Dr. Kallon described as re-denomination of the country’s currency was to reduce transaction cost as well as the burden which he said households are going through with the risk of carrying bundles of money, for fear of thieves who will stop at nothing but to trace people who have withdrawn huge sums of money from banks.
He also mentioned that the re-domination will provide a psychological boost to the people of the country which he said will help strengthen the economy of a given country, for according to him that is what happens when countries re-de-nominate their currencies.
He stressed the need for sound economic policy, as well as keeping the country’s productivity up, for without which, the country will go back to where it is. He also indicated that this was the right time to do re-denomination for mining activities as well as agricultural activities are underway, adding that that will reduce the demand for foreign currency.
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He said the role of commercial banks will be very crucial in all of these, adding that Bank of Sierra Leone will engage them to design a roadmap to achieve this. He also acknowledged that education will be key in all of these. He urged that people should be provided with the relevant information they need with regards the new currencies.
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