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Bank of Ghana Ensures Financial Stability Through Effective Supervision

The Bank of Ghana has reiterated its commitment to ensuring the stability of the financial system by effectively regulating and supervising all regulated financial institutions (RFIs) in the country.

Supervision Strategy

The central bank’s supervision strategy is centered on conducting regular on-site examinations at RFIs, which are updated based on the outcomes of these examinations. Supervisors also visit these institutions periodically to assess certain aspects of their operations based on risk profiles, with findings reported and recommendations implemented continuously monitored.

Sanctions for Regulatory Breaches

In addition, the Bank of Ghana has taken steps to sanction key management personnel, board directors, and significant shareholders for regulatory breaches identified during examination processes.

Collaboration and Information Sharing

To further promote financial stability, the central bank collaborates with other financial regulators in the country through the Financial Stability Council. This council brings together regulatory authorities from various sectors to identify and evaluate threats, vulnerabilities, and risks to the stability of the financial sector.

The Bank of Ghana also considers the affiliations within and outside the country when supervising RFIs, ensuring that institutions are assessed on a consolidated level where necessary. The central bank has signed Memoranda of Understanding (MOUs) with home supervisors of Ghanaian subsidiaries to share supervisory information that may impact the safety and soundness of their respective institutions.

International Cooperation

The Bank of Ghana also participates in supervisory colleges organized by foreign supervisors, which bring together all other supervisors globally to discuss issues related to supervised institutions. Within the Economic Community of West African States (ECOWAS), there is the College of Supervisors of the West African Monetary Zone (CSWAMZ), which holds quarterly meetings to discuss how best to oversee individual and cross-border financial institutions.

Stakeholder Engagement

The central bank engages regularly with external stakeholders, including the Institute of Chartered Accountants, Ghana (ICAG) and the Ghana Association of Banks (GAB), to ensure that supervisors are aware of matters affecting the banking industry. The Bank is also a member of international associations that set standards for the banking industry, including:

  • Basel Consultative Group (BCG)
  • Alliance for Financial Inclusion (AFI)
  • Network for Greening the Financial System (NGFS)
  • Regional Consultative Group for Sub-Saharan Africa of the Financial Stability Council

Capacity Development

Capacity development is another key aspect of the Bank of Ghana’s supervision strategy. The central bank continues to receive capacity development support from international organizations such as:

  • International Monetary Fund (IMF)
  • AFRITAC West 2
  • Bank of England
  • Toronto Centre
  • World Bank

The Bank recently engaged a long-term technical expert for banking supervision in areas such as Basel II/III Capital Framework, Risk-Based Supervision, and Climate-Related Financial Risk.

Addressing Emerging Issues

The central bank has also taken steps to address emerging issues related to the COVID-19 pandemic, including:

  • Issuing regulatory guidance on the application of International Financial Reporting Standards (IFRS) expected credit loss (ECL) impairment model.
  • Issuing regulatory reliefs to RFIs that fully participate in the Domestic Debt Exchange Programme (DDEP).

Conclusion

In conclusion, the Bank of Ghana is committed to effectively regulating and supervising RFIs to promote the safety and soundness of institutions and ensure the stability of the banking industry, ultimately protecting depositors’ funds.