Stability restored, next task is durability – BoG Governor urges banks
The Bank of Ghana has declared an end to what it described as the immediate crisis management phase in the financial sector, calling on banks to shift their focus toward building long-term resilience.
Speaking at the bi-monthly meeting of heads of banks in Accra on Wednesday, February 18, Governor of the Bank of Ghana (BoG), Dr. Johnson Asiama outlined a new strategic vision for the industry centered on a durable industry health rather than only stability.
“Stability has been restored. The task now is durability,” Dr. Asiama stated, noting that this phase requires comprehensive structural changes within institutions and emphasized that the central bank will act as a collaborative but firm partner in this transition.
“Durability requires stronger business models, broader ownership, deeper intermediation, disciplined innovation, and sound governance,” Governor Asiama added. “The Bank of Ghana will continue to engage as a firm, fair, and forward-looking partner, supportive where necessary, but clear in its expectations.”
Dr. Asiama further shed light on the Monetary Policy Committee’s (MPC) decision last month, which saw a further reduction in the policy rate to 15.5%, explaining that the 128th MPC meeting was held against a backdrop of improving conditions both globally and domestically, allowing for an easing monetary policy stance.
“With inflation declining faster than anticipated and expectations well anchored, the Committee judged that monetary conditions remained sufficiently tight relative to prevailing inflation dynamics,” Dr. Asiama explained. “Consequently, the MPC, by a majority decision, reduced the Monetary Policy Rate by 250 basis points to 15.50 %.”
This cut, he said, is expected to provide relief to the economy and influence lending rates in the months ahead, pending the next MPC meeting scheduled for March 16 – 18.
The Governor also noted that beyond the policy rate cuts, the Central Bank has been intensifying its “micro-prudential oversight,” explaining that the Bank conducted a comprehensive “thematic review of banks’ operations last year, scrutinizing the very foundations of their businesses.”
“As part of our efforts to ensure durability, the central bank undertook a thematic review of banks’ business models, examined funding structures and governance effectiveness last year,” Dr. Asiama confirmed, and indicated that the analysis will inform decisions on future regulatory expectations and vulnerabilities that may not be visible on traditional capital adequacy ratios (CAR).
The BoG Governor highlighted several other critical issues currently shaping the banking industry including the growing threat of cyber security incidents, and urged banks to boost their digital defenses “as the financial system becomes more interconnected.”
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