The Governor of the Bank of Ghana, Dr. Ernest Addison, has expressed concern about the practice where some individuals hoard huge amounts of foreign currencies outside of the banking system.
Responding to a question at the Central Bank’s Monetary Policy Committee press conference in Accra about the reported hoarding of one million dollars and 300,000 euros by former Water Resources and Sanitation Minister, Cecilia Dapaah at her home, the Governor said such practice is worrying.
Nonetheless, he avoided further comments on the matter which is before the court.
“It is a worry to all of us, but it is a matter that is still unfolding and is in court. Therefore, there is nothing to say about it.”
The Bank of Ghana has over the years encouraged individuals and institutions to keep their foreign and local currencies with commercials Banks in Ghana.
This is to help in effectively checking the amount of currencies in circulation as part of the Inflation Targeting Policy. In the case of the foreign currencies, it will help provide the commercial banks with the needed foreign exchange to support their foreign transactions.
The Governor said the Central Bank is using the various monetary tools to deal with the challenge.
Fresh data from the Central bank showed that currencies outside the banking sector went up from ¢22.1 billion in May 2022 to ¢31.6 billion at the end of May 2023.
Dr. Ernest Addison explained that the Bank of Ghana has increased its open market operations as well as improved liquidity management instruments to also address the challenge.
“This is an area that the Bank of Ghana is taking a closer look at when it comes to liquidity operations and expect more measures from the Central Bank in the coming weeks”.
The Governor noted that there is a seasonal effect in terms of contributing to this spike, adding “One can talk about the purchase of cocoa and gold”.
But he noted that with the purchase of gold , there had been a cedi cover to deal with this challenge.
The Governor also announced that all commercial banks have submitted their re-capitalization plans to the Central Bank.