The Governor of the Bank of Ghana, Dr Johnson Asiama, has affirmed the central bank’s commitment to reviewing the Cash Reserve Ratio (CRR) for commercial banks but stressed that any adjustments must be made cautiously to prevent economic disruptions.
“This review should be done gradually,” he noted, acknowledging the impact of the CRR on commercial banks.
“We recognise the impact of the Cash Reserve Ratio for commercial banks and intend to review it critically.”
He further assured that “any adjustments must be phased to avoid unintended economic consequences.”
His comments followed an appeal from the Governing Council of the Ghana Association of Banks (GAB) during a meeting aimed at addressing industry challenges.
In March 2023, the Bank of Ghana increased the CRR on local currency deposits from 12% to 14% as part of measures to absorb excess liquidity.
However, commercial banks have urged the central bank to reconsider the policy, arguing that it is constraining financial intermediation and raising operational costs.
Discussions also covered Ghana’s credit rating challenges and their effect on correspondent banking relationships.
GAB members requested an upward revision of Nostro and affiliate exposure limits to alleviate constraints on international transactions.
In response, Dr Asiama acknowledged the difficulties banks face in securing new correspondent banking relationships and committed to assessing the situation further.
The Governing Council of GAB also urged the central bank to discontinue the mandatory sale of foreign exchange proceeds from mining and oil firms to the Bank of Ghana, arguing that allowing these proceeds to circulate through the banking system would enhance foreign exchange price discovery.
Dr Asiama assured them of his commitment to further engagement on the request.
Additionally, the governor stated that the central bank is working on a review of Money Transfer Operators (MTOs) and called on commercial banks to collaborate in streamlining the sector to enhance transparency.
He highlighted the growing influence of MTOs and fintech companies in the remittance business and raised concerns about regulatory gaps that could expose the economy to foreign exchange losses.
Dr Asiama also revealed that the Bank of Ghana intends to extend the special dispensation granted to commercial banks during the Domestic Debt Exchange Programme (DDEP).
The move comes in response to concerns raised by banks over the expiration of special provisions for restructured cocoa bonds under the DDEP, set to end in April 2025.
Lenders fear that market illiquidity and COCOBOD’s financial position could make it difficult to sell these bonds.
Addressing the issue of rising non-performing loans, Dr Asiama stressed the importance of fiscal policy in curbing inflation and interest rates.
He reaffirmed the central bank’s commitment to enhancing agricultural financing and supporting the Ghana Incentive-Based Risk-Sharing System for Agricultural Lending (GIRSAL) in securing additional guarantee funds.
However, he also called on commercial banks to lead stakeholder engagements aimed at de-risking agricultural value chains.
