The Bank of Ghana (BoG) has raised concerns that weak legal documentation and improper risk management practices could undermine confidence in the country’s growing financial markets if urgent and well calculated steps are not deployed to strengthen the market systems.
The First Deputy Governor of the Central Bank of Ghana, Dr. Zakari Mumuni, indicated that the country’s financial sector can no longer depend on informal arrangements owing to sophistication and complex nature of market transactions.
Speaking at the BOG/Frontclear Market Training Workshop on Repo Guidelines, Global Master Repurchase Agreement (GMRA), and ISDA Documentation in Accra, Dr. Mumuni stressed on the legal certainty and the operational discipline which are now central to maintaining stability in the financial system.
“The integrity of Ghana’s financial markets will be independent from informal conventions and ambiguous documentation. It must rest on legally enforceable agreements, operationally sound processes, and professionals who understand precisely what they have signed,” he stated.
During the workshop, officials from commercial banks, treasury departments, legal and risk teams, the Ghana Fixed Income Market, Central Securities Depository and the Ghana Securities Industry Association to build capacity in global financial market standards were brought together.
Furthering his explanation, Dr. Mumuni said as Ghana’s fixed-income market expands and attracts more sophisticated instruments, institutions must follow suit to strengthen their internal controls, legal frameworks and risk culture.
He also noted that repo markets have become essential in supporting liquidity management and monetary policy implementation”, he said.
Dr. Mumuni in highlighting the importance of ISDA documentation in derivatives trading, said the framework helps institutions manage payment obligations, collateral arrangements and default events effectively.
The Deputy Governor further called for stronger coordination between treasury, legal, risk management and operations departments within banks and financial institutions.
“A sound financial transaction demands strong coordination across the front office, risk management, legal, operations, and senior management,” he stressed.
Dr Mumuni also called for open discussions of issues around collateral management, close-out netting and operational readiness to improve resilience within Ghana’s financial markets.
The Bank of Ghana has promised to continually working with market stakeholders and international partners including Frontclear to deepen liquidity and strengthen confidence in the country’s financial system.
By: Martha Seyram Jackson | Metrotvonline.com | Ghana
