Rédaction Africa Links 24 with Ghanaian Times
Published on 2024-02-19 08:01:08
The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has announced additional monetary policy measures aimed at reducing inflation by mopping up excess capital from the market.
As of now, inflation has declined to 35.2 per cent, a significant decrease from its peak of 54.2 per cent in December of last year.
The new measures, set to take effect on November 30, 2023, include the unification of the currency holding for the Cash Reserve Ratio requirement on both foreign currency denominated deposits and domestic currency deposits for banks. Additionally, a new unified Cash Reserve Ratio for total deposits (cedi and foreign currency) is to be held in Cedis.
Governor Dr Addison shared these details during a news conference at the 115th regular meeting of the MPC in Accra on Monday, stressing that these measures are designed to address excess structural liquidity conditions in the market and provide additional support to the disinflation process.
Furthermore, Dr Addison explained that the Cash Reserve Ratio requirement on foreign currency denominated deposits and domestic currency deposits of banks will be reset to 15 per cent. He also assured that the Committee will continue to monitor developments in the banking sector and deploy other policy tools as necessary to ensure stability.
The Governor stated that the new measures will contribute to lowering inflation and withdrawing excess liquidity from the market. In addition, he disclosed that all 23 universal banks have submitted re-capitalization plans to the BoG, and these plans have been reviewed by the Banking Supervision Department and the MPC and found to be credible.
Dr Addison expressed hope that within the next two years, most banks will have been capitalized and be able to meet the capital adequacy threshold without reliefs, suggesting that they are currently meeting these thresholds with regulatory reliefs. He emphasized that despite the impact of the Domestic Debt Exchange Programme (DDEP), the banking sector remains stable, sound, liquid, and profitable.
The Governor highlighted that profitability has continued to improve as banks invest in high yielding short-dated BOG and Government of Ghana (GOG) instruments. He also pointed out that various stress tests on banks’ capital, following adverse macroeconomic shocks, have indicated stability in the banking sector.
In summary, Dr. Addison presented a positive outlook for the banking sector despite the challenges faced, showing resilience and stability in the face of economic adversity. It is through measures such as those introduced by the MPC that inflation can be controlled and excess liquidity managed, ensuring a stable and prosperous future for the banking sector and the economy.
BY KINGSLEY ASARE
Read the original article on Ghanaian Times
