Dr. Johnson Pandit Asiama, the newly sworn-in Governor of the Bank of Ghana, outlined a comprehensive strategy to recalibrate the nation’s monetary policy and strengthen its financial framework. His vision emphasizes clarity, predictability, and responsiveness in policy-making, aiming to address emerging economic challenges effectively. A key focus is a proactive and precise approach to inflation management, leveraging data analytics and artificial intelligence. Furthermore, the Bank aims to foster collaboration with government agencies, particularly in managing food prices, ensuring consistent policy actions to avoid conflicting signals, and enhancing monetary policy implementation. This strategy emphasizes transparency and aims to build a more robust and efficient financial system for Ghana.
A critical aspect of the Bank’s recalibrated approach is reforming the inflation targeting framework. Discontinuing the practice of differentiated cash reserve requirements and focusing on open market operations for liquidity management will be central to this reform. Improved communication with banks on regulatory matters and regular dialogue are also prioritized. The Governor expressed confidence in the gradual return of inflation to the target range within the forecast horizon, emphasizing the Bank’s commitment to maintaining exchange rate stability and mitigating volatility. This commitment is underscored by the intention to end currency speculation and create a stable foreign exchange market to bolster economic activity.
Dr. Asiama outlined several strategic interventions to achieve exchange rate stability and enhance the foreign exchange market. These include enacting a new foreign exchange law to replace the existing Act 723 of 2006. Targeted market operations aim to eliminate foreign exchange leakages and improve reserve management. The Bank plans to deepen participation in the Pan-African Payment and Settlement System, facilitating inter-African trade using local currencies. Further reforms in the remittance sector are planned, collaborating with fintech and remittance agencies to harness remittances as a significant source of foreign exchange. Structured and transparent systems will be introduced to ensure fair pricing and distribution in the forex market.
The leveraging of Ghana’s gold reserves and strategic foreign assets to support the cedi is another key component of the strategy. Reforming the Bank of Ghana’s Domestic Gold Purchase Programme will improve efficiency, enhance reserve accumulation, and increase transparency in gold transactions. These measures are intended to create a more resilient foreign exchange market, inspiring confidence among investors and businesses. Furthermore, the Governor emphasized the need to realign regulatory mandates to promote higher levels of financial intermediation to support economic growth.
Addressing the challenges within the banking sector is paramount in this reform agenda. While acknowledging the sector’s broad stability following recent crises, Dr. Asiama highlighted the need for targeted reforms to address legacy challenges and ensure continued resilience. Enforcing strict prudential regulations while fostering responsible lending and innovation is crucial. The Bank will also tackle high non-performing loans (NPLs) and weak risk management practices within the industry. Collaborating with banks to reduce cybersecurity breaches and strengthening capital adequacy requirements are also key objectives. Updating the Banks and Specialized Deposit-Taking Institutions Act of 2016 (Act 930) will enhance the resolution framework and ensure the effective management of distressed institutions while preserving financial stability.
The Governor’s overarching vision includes boosting financial inclusion and innovation to foster inclusive economic growth, poverty reduction, individual empowerment, and a stable and competitive financial system. He noted Ghana’s potential to become a regional hub for financial technology and digital assets. This transformation will be pursued with safeguards and policies to ensure financial stability while fostering innovation in the payment ecosystem. Introducing a digital strategy to adapt to the digital age, improve operations, and better serve stakeholders’ needs are key priorities. Supporting initiatives that expand access to financial services through fintech and mobile banking solutions, especially for underserved communities, is also a core objective. Collaboration with banks, startups, and international partners aims to build a stronger digital finance ecosystem supporting secure transactions, faster cross-border payments, and financial accessibility for all. A clear regulatory framework for digital assets will ensure the safe and structured introduction of new financial innovations. Finally, the Bank aims to promote greater fiscal and monetary policy coordination while maintaining operational independence, enhancing provisions in the Bank of Ghana Act, 2002 (Act 612) to further strengthen its autonomy, and reverse its negative equity position to maintain financial stability, credibility, and public trust.
