Anthony Smaré, President of the Papua New Guinea Chamber of Resources and Energy, has issued a stark warning regarding the potential consequences of the Gold Bill's restrictions on the independence of the Central Bank in the production of national currency. In a statement released yesterday, Smaré cautioned that such restrictions would inevitably lead to uncontrolled inflation and a significant deterioration of the PNG Kina. Smaré highlighted the importance of the reforms introduced by former Prime Minister Sir Mekere Morauta, which established the Bank of Papua New Guinea (BPNG) as independent from government and foreign influences in its management of monetary policy and regulation of the banking sector. Under the Central Banking Act, the BPNG holds sole authority to issue currency notes and mint coins for the nation, thereby controlling the flow of money in the PNG economy.
Smaré pointed out that provisions within the National Gold Corporation Bill effectively undermine the independence of the BPNG. Sections 329 and 330 of the NGC Bill specify that the National Mint company possesses the exclusive right to produce currency, with Section 331 prohibiting the BPNG from outsourcing currency production to any entity other than the National Mint company. Furthermore, the NGC Bill dictates that the Central Bank is restricted from minting or issuing gold coins, with Section 332 transferring this responsibility to the privately-owned National Mint without any constraints on currency production. Highlighting Section 326 of the NGC Bill, Smaré emphasized that a Director-State Equity has the authority to compel the Governor of PNG to engage the National Mint company for the production of currency and coins at their discretion. Smaré's warning underscores the potential risks associated with compromising the independence of the Central Bank, particularly in matters pertaining to currency production and monetary policy. As discussions surrounding the National Gold Corporation Bill continue, stakeholders are urged to carefully consider the implications of these provisions on the stability and integrity of Papua New Guinea's financial system. Also read Comments are closed.
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