The Institute of Economic Research and Policy (IERPP) has cautioned the Bank of Ghana (BoG) against rushing into new regulatory reforms without careful consideration, warning that it could undermine progress made in the banking sector.
Prof. Isaac Boadi, Executive Director of IERPP, noted that “Regulations must safeguard stability, not choke growth.”
He urged the central bank to adopt a phased, data-driven approach to reform implementation.
The BoG’s new regulatory framework includes measures such as the Dual-Currency Reserve Requirement, Cap on Cross-Currency Card Transaction Fees, and Mandatory Disclosure of Issuer Fees.
While these measures aim to enhance stability and transparency, IERPP recommends adjustments to prevent unintended consequences.
For instance, the Dual-Currency Reserve Requirement could restrict credit if reserve thresholds are set too high. IERPP suggests a gradual rollout to prevent liquidity constraints. Similarly, the 2% cap on cross-currency card transaction fees may erode bank revenues, and a tiered fee system could provide flexibility while protecting consumers.
IERPP also warns that enforcing a sudden Non-Performing Loan (NPL) ratio cap of 10% could force banks into aggressive write-offs, reducing credit availability. A phased approach with performance-based incentives is recommended.
Prof. Boadi emphasized the need for careful consideration, stating that reforms must be executed with precision and consultation to maintain momentum without triggering counterproductive effects.
“We recognize the BoG’s commitment to financial integrity and resilience. However, reforms must be executed with precision and consultation to maintain momentum without triggering counterproductive effects.”
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