Financial Crime World

Here is the article rewritten in Markdown format:

Fiscal and Financial Stability Councils Now Established

After approximately a year, the Bank of Ghana has published a report on the Council’s activities and broader financial stability issues. The Bank of Ghana’s Financial Stability Review (2019) highlights the establishment of the Financial Stability Advisory Council (FSAC) as an inter-institutional advisory coordination body responsible for advising financial sector stakeholders and the President of Ghana.

Key Recommendations

The FSAC held its maiden meeting on April 30, 2019, where members signed a Memorandum of Understanding (MoU) outlining mutually accepted expectations. To ensure effective identification of risks to financial stability, the Council recommended six initiatives to reduce information gaps within the financial system:

  • Gather accurate data on exposure of financial institutions to each other.
  • Ascertain how real sector performance affects financial stability.
  • Determine factors affecting foreign investor participation in the stock market and its impact on financial stability.
  • Identify government securities, government debt, and energy sector exposure in the financial system.
  • Agree on leading indicators of risks within the Ghanaian economy.
  • Develop a risk indicator data hub to monitor developments.

Current Domestic Debt Exchange

The current Domestic Debt Exchange (DDE) has raised concerns about the industry’s exposure to government securities and debt. The Financial System Government Exposure Initiative and Leading Risk Indicators Initiative by the FSAC take on new significance in light of these developments.

Regulatory Models

A theoretical examination of financial regulation literature highlights four main regulatory systems:

  • Traditional/Silo: Each regulator is responsible for its sector.
  • Integrated: Regulators work together to achieve common goals.
  • Partially Integrated: A combination of traditional and integrated approaches.
  • Twin Peaks: A dual regulatory approach, with two regulators overseeing different aspects of the financial system.

Ghana currently operates under a Traditional/Silo system. Alternative models, such as Integrated or Twin Peaks, may offer benefits in terms of enhanced financial stability.

Conclusion

This article aims to raise questions, educate, and spark discussion about the future of Ghana’s financial services industry. The simple question is: Would you like to see a change in our regulatory approach? What do you think works for you?

Watch: A short video on Ghana’s financial services system put together by Joy Business Team, Joy FM, and The Multimedia Group (2018).