The Governor of the Financial institution of Ghana, Dr Johnson Asiama, has revealed that the central financial institution is dedicated to reviewing the present Money Reserve Ratio (CRR) for business banks within the nation.
Nonetheless, he emphasised that “this overview must be finished progressively” to forestall financial disruptions.
Dr Asiama acknowledged the impression of the CRR on business banks, stating, “We recognise the impression of the Money Reserve Ratio for business banks and intend to overview it critically.”
He assured that “any changes should be phased to keep away from unintended financial penalties.” His feedback got here in response to an attraction from the Governing Council of the Ghana Affiliation of Banks (GAB) throughout a gathering to debate trade challenges.
The assembly, requested by GAB members, aimed to foster an open dialogue between banks and regulator to construct belief and consensus on key monetary insurance policies.
Background on Money Reserve Ratio adjustment
In March 2023, the Financial institution of Ghana introduced a reversal of the money reserve ratio on native foreign money deposits for banks, growing it from 12% to 14%. This measure was a part of efforts to mop up extra liquidity available in the market.
Throughout the assembly, business banks appealed to the central financial institution to overview the CRR, arguing that it was limiting monetary intermediation and growing banking prices.
The dialogue additionally coated Ghana’s credit standing challenges and their impression on correspondent banking relationships. GAB members known as for an upward revision of Nostro and affiliate publicity limits to ease constraints on worldwide transactions.
In response, Dr Asiama acknowledged the sensible difficulties banks face in securing new correspondent banking relationships and dedicated to additional assessing the state of affairs.
Regulation of Overseas Trade and Cash Switch Operators
The Governing Council of the Ghana Affiliation of Banks urged the Financial institution of Ghana to finish the obligatory sale of overseas alternate proceeds from mining and oil corporations to the central financial institution.
They argued that permitting these proceeds to stream by way of the banking system would enhance overseas alternate value discovery. Dr Asiama assured them of his dedication to additional engagement on this request.
Moreover, the Governor said that the Financial institution of Ghana is working to overview the operations of Cash Switch Operators (MTOs) and urged business banks to cooperate in streamlining the sector for higher transparency.
He highlighted the rising affect of MTOs and fintech corporations within the remittance enterprise and addressed issues about regulatory gaps that would result in overseas alternate losses for the nation.
### **Particular Dispensation for Industrial Banks and Agricultural Financing**
Dr Asiama additionally revealed that the central financial institution is dedicated to extending the particular dispensation granted to business banks in the course of the Home Debt Trade Programme (DDEP).
This response got here after banks raised issues over the expiration of the particular dispensation on restructured cocoa bonds underneath the DDEP, which is ready to finish in April 2025. Banks expressed fears that market illiquidity and COCOBOD’s monetary place may make it tough to promote these bonds.
On the problem of rising non-performing loans, Dr Asiama emphasised the position of fiscal coverage in decreasing inflation and rates of interest.
He reaffirmed the Financial institution of Ghana’s dedication to doubling agricultural financing and supporting the Ghana Incentive-Primarily based Threat-Sharing System for Agricultural Lending (GIRSAL) in elevating extra assure funds.
Nonetheless, he additionally urged business banks to take the lead in stakeholder engagements to enhance and de-risk chosen agricultural worth chains.
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