Dr. Johnson Asiama has been nominated as Bank of Ghana Governor
The Governor of the Bank of Ghana, Dr. Johnson Asiama, has announced that the central bank is committed to reviewing the Cash Reserve Ratio (CRR) for commercial banks in a phased manner to prevent economic disruptions.
Speaking during a meeting with the Governing Council of the Ghana Association of Banks (GAB), Dr. Asiama acknowledged the impact of the CRR on commercial banks and assured that any further adjustments would be made cautiously by the Central Bank.
“We recognise the impact of the Cash Reserve Ratio on commercial banks and intend to review it critically. However, this review should be done gradually to avoid unintended economic consequences,” he said during the meeting.
The meeting with the BoG Governor was initiated by GAB members who aimed to foster open dialogue between banks and the central bank on industry challenges, including the impact of the CRR, Ghana’s credit rating issues, and correspondent banking relationships.
The Bank of Ghana had previously increased the CRR from 12% to 14% in March 2023 as part of efforts to mop up excess liquidity in the market. However, commercial banks have since appealed for a downward review, arguing that the policy limits financial intermediation and raises operational costs.
Dr. Asiama acknowledged these concerns and committed to further engagement with stakeholders to assess the implications of a potential adjustment.
Another key issue raised by the banking sector was the mandatory sale of foreign exchange proceeds from mining and oil companies to the central bank. GAB members urged the Bank of Ghana to allow these proceeds to flow through commercial banks, arguing that it would enhance foreign exchange price discovery and improve liquidity.
Dr. Asiama on his part assured the banks that the central bank would engage further on the matter.
Additionally, he announced that the Bank of Ghana is reviewing the operations of Money Transfer Operators (MTOs) to enhance transparency in the remittance sector. He urged commercial banks to collaborate in streamlining the sector to prevent foreign exchange losses.
Dr. Asiama also addressed concerns over the expiration of the special dispensation granted to commercial banks during the Domestic Debt Exchange Programme (DDEP). The dispensation, which covers restructured cocoa bonds, is set to expire in April 2025. Banks fear that market illiquidity and COCOBOD’s financial position may hinder their ability to sell these bonds.
In response, Dr. Asiama assured the industry of the central bank’s commitment to extending the dispensation to ensure stability in the financial sector.
On the issue of rising non-performing loans, he emphasized the role of fiscal policy in reducing inflation and interest rates.
The Governor also reaffirmed the Bank of Ghana’s commitment to doubling agricultural financing, pledging support for the Ghana Incentive-Based Risk-Sharing System for Agricultural Lending (GIRSAL) to raise additional guarantee funds.
However, Dr. Asiama urged commercial banks in the country to take the lead in stakeholder engagements to de-risk key agricultural value chains.
MA