Dr. Ernest Addison, Governor of the Bank of Ghana (BOG), says climate change consequences pose a threat to Ghana’s financial system.
He said the disruptions of infrastructure and farmlands occasioned by climate change could deny farmers and other investors the ability to service their loans.
This, the Governor said, could lead to high non-performing loans, which could undermine the performance of financial institutions, especially the banks.
The Governor was speaking at the Chartered Institute of Bankers(CIB), Ghana’s 28th National Banking and Ethics Conference in Accra.
The Conference was on the theme “Resilience in the Financial System: Navigating Horizon Risk” and it underscored the relevance of the integration of ethical banking practices within the financial sector.
The Governor said owing to the impact of climate change, banks might face liquidity challenges, which could further disrupt the financial sector.
He said in the face of the potential risk of climate change, banks in Ghana must prioritise climate and sustainability issues through devoting time and resources to promote sustainability banking practices.
He emphasised that the Central Bank would engage global bodies within an environmental and social governance framework so that Ghana’s banking sector environmental practices aligned with international standards.
He said despite the prominence of digital banking systems, its associated risk had become imminent, noting that pressing issues, including data privacy, cyber threats, and security must not be ignored.
Dr. Addison said these developments required the intensification of efforts to establish a robust cybersecurity framework across Ghana’s financial sector.
He said banks have been encouraged to invest in advanced technology and capacity building to keep pace with the rapid digital transformation while maintaining a comprehensive cyber-security framework to prevent breaches.
Mr. Kofi Adomakoh, President, Ghana Association of Banks,urged banking institutions to collaborate with the Central Bank to address ethical issues within the sector.
He said the introduction of advanced technology, notably artificial intelligence, would enhance the capacity of the banking sector to address ethical cyber threats.
Mr Adomakoh, who is also the Managing Director GCB Bank PLC, said the evolving needs of banking customers must be complemented by innovation on the part of banking institutions.
He was delighted by the forward-thinking initiatives, such as the new curriculum to equip bankers with the requisite skills in digital banking.
Mr. Benjamin Amenumey, President, CIB Ghana, said the use of digital technologies presented cybersecurity vulnerabilities to banking institutions.
He said the banking institutions must implement robust internal control systems and a cyber security framework to address the vulnerabilities.
The President urged banking institutions to enhance credit risk assessment and improve loan recovery frameworks to solve the non-performing loans challenges of financial institutions.
GNA