Author(s)

Brima I. B. Kargbo^1*, Emmanuel Y. Gbolonyo²

¹National Social Security and Insurance Trust, Freetown, Sierra Leone.
²School of Economics, University of Cape Town, Cape Town, South Africa.

Many developing and transitional economies have attempted to embark on currency reforms including redenomination. There are various reasons to redenominate a country’s currency but the most important factor is inflation. The primary objective of this research is to perform a critical evaluation of the literature in a bid to broadly understand the efficacy of currency redenomination and why some countries face the difficulty of redenominating several times in order to attain stability but still not successful and lessons to be drawn in the context of Sierra Leone. Based on the literature, redenomination will be ineffective where it is employed on a very weak economy base or macroeconomic stabilization policies are just underway. Redenomination is not a panacea to economic woes as it does not work in isolation but is a component of other broad based macroeconomic stabilization policies. Thus, redenomination is a means to an end and not an end in itself.

Sierra Leone, Currency, Redenomination, Macroeconomic Stability

Kargbo, B. and Gbolonyo, E. (2023) Dropping the Zeroes: Between Hope and Reality for Sierra Leone: A Critical Review of the Literature. Modern Economy, 14, 163-177. doi: 10.4236/me.2023.142011.