The Governor of the Bank of Ghana (BoG), Dr. Johnson Asiama, has announced stringent measures to curb excessive foreign currency cash withdrawals, signaling the end of an era where corporations could readily access substantial amounts of hard currency over the counter. This move aims to address the concerning trend of companies withdrawing large sums from their Foreign Currency Accounts (FCAs), despite these accounts being specifically designated for international transactions. Dr. Asiama illustrated the issue by citing instances where corporations have attempted to withdraw millions of dollars in cash, even though their financial obligations lie outside the country, rendering such large local cash withdrawals unnecessary and potentially suspicious. The BoG has now effectively halted this practice, seeking to ensure that FCAs are used for their intended purpose and to prevent potential misuse of foreign currency.
The Governor emphasized that these restrictions are targeted specifically at large corporations and will not affect ordinary individuals who require smaller amounts of foreign exchange for personal use. He clarified that individuals needing modest amounts of foreign currency can still access it through their banks, distinguishing their needs from the large-scale cash withdrawals previously made by corporations. This distinction underscores the BoG’s intention to maintain reasonable access to foreign currency for personal transactions while curbing potentially illicit or speculative activities involving large sums.
Responding to criticisms of the BoG’s actions, Dr. Asiama defended the measures as essential for maintaining order and stability within the foreign exchange market. He drew an analogy to a football match, emphasizing the importance of established rules to ensure fair play and proper functioning. According to him, the BoG’s intervention is akin to establishing clear rules within the financial arena, ensuring that all participants operate within a defined framework. This, he argued, is essential to prevent market distortions and maintain the integrity of Ghana’s financial system.
The Governor revealed that intelligence gathered by the BoG and its partners indicated a significant problem with undeclared cash being smuggled out of the country, sometimes involving sums exceeding a million dollars. These illicit activities, he warned, create “leakages” in the system and undermine efforts to combat money laundering. The large-scale cash withdrawals by corporations could potentially contribute to this problem by providing a source of undeclared funds for smuggling. By restricting these withdrawals, the BoG aims to close a potential avenue for illicit financial flows and strengthen its fight against money laundering.
Dr. Asiama stressed that the directives were not implemented unilaterally but were the result of careful planning and extensive consultation with the banking sector. He explained that the BoG met with the CEOs of various banks to gather their feedback and ensure that the measures were well-considered and agreeable to all stakeholders. This collaborative approach, he argued, explains the absence of protests from the banks, as they were involved in the decision-making process and understood the rationale behind the new regulations.
The overarching goal of these measures, according to the Governor, is to reinforce financial discipline and safeguard the integrity of Ghana’s foreign exchange market. By establishing clear boundaries for foreign currency transactions, particularly large cash withdrawals, the BoG aims to create a more efficient and transparent market. This move signals a significant shift in the BoG’s approach to managing foreign exchange, prioritizing regulatory oversight and market integrity over unrestricted access to large sums of hard currency. The long-term impact of these measures remains to be seen, but the BoG’s assertive stance indicates a commitment to maintaining stability and preventing potential abuses within Ghana’s financial system.
