Bank Governor Keifala Kallon defends decision one year after currency switch
In a recent interview on Radio Democracy 98.1's popular program Good Morning Sierra Leone, the Governor of the Central Bank of Sierra Leone, Professor Keifala Kallon, addressed the Leone conversion, clarifying important points and explaining the reasons behind it. provided insight. Currency reset.
Professor Kallon initially denied his claim that the changes promised to increase Leone's exchange value. He likened the process to resetting a cell phone infected with a virus. In this case, you start over but keep the same values. According to the governor, the move was primarily aimed at restructuring the country's monetary system and not at increasing the exchange rate.
The Governor acknowledged that the transition process faced political resistance from the beginning. He expressed the belief that some people oppose success because they fear the government will benefit at their expense. He argued that this switch is a technique used in various countries, especially during times of hyperinflation, to encourage responsible spending behavior by reducing the number of currency units.
Professor Mr. Kallon pointed out that several factors beyond his control played an important role in Leone's exchange rate behavior after the transition. He cited the US Federal Reserve's monetary policy, which led to an increase in demand for dollars and the appreciation of the dollar against Leone. He emphasized that this was an important issue that arose after the transition.
The governor explained that the original plan was to allow the new and old currencies to coexist for some time before the old Leone banknotes were phased out. However, more unused old Leone banknotes were returned to banks than expected, leading to the expansion of the dual currency system. Professor Kallon argued that the extension was necessary to prevent a crisis like the one in Nigeria.
Asked about the timing of issuing the new currency, Professor Caron admitted that the timing was not ideal. He claimed that the decision to print the new Leone banknotes was due to the buying up of the old currency, which exceeded expectations. Due to the overwhelming amount of old Leone banknotes in circulation, the government decided to print a new currency.
The Governor disagreed when asked whether the transition strategy was a failure. He questioned claims that the move led to exchange rate devaluation, noting that even countries that did not make the move are facing economic challenges. Professor Caron emphasized the basic economic principle that everything has a price and that various factors influence exchange rates.