Bank of Ghana advises banks and others to stop using liquid funds to buy Treasury Bills

Bank of Ghana advises banks and others to stop using liquid funds to buy Treasury Bills

- The Bank of Ghana has cautioned banks and special deposit institutions against using liquid funds to purchase treasury bills and other securities

- It gave the instruction after approving a reduction in the primary reserve of the banks from 10% to 8%

- The Central Bank indicated that it has introduced measures to ensure the banks comply with the directive

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The Bank of Ghana has sent a word of caution to banks and specialised institutions to refrain from using liquid funds to purchase securities from either itself or the government of Ghana.

This comes after it approved the reduction of the primary reserve of banks from 10% to 8%.

The reduction was intended to release more liquidity to protect the economy against the impact of the coronavirus.

READ ALSO: Bank of Ghana waives charges on Mobile Money transactions GHC100 and below

It was also to provide support for crucial sectors of the economy just like the reduction of the Capital Conservation Buffer (CCB) for banks from 3% to 1.5%.

Per a report by, another measure taken to protect the banks was the reduction of provisions for loans in the “Other Loans Especially Mentioned” (OLEM) category from 10% to 5% for all banks and Special Deposit Institutions (SDIs).

The Central Bank noted that it has implemented measures to ensure that the banks fully comply with the directive, such as weekly monitoring of all banks and SDIs.

The measures include refraining from declaring and paying dividends or other distributions to shareholders until approval is given for those reasons.

In other news, the Bank of Ghana’s Monetary Policy Committee (MPC) has reduced the policy rate to 14.5%, has learned.

The reduction is a 150 basis point reduction in the rate, which was initially 16% and remained unchanged for a long time.

The policy rate is the rate at which the Bank of Ghana lends to commercial banks; it also helps to determine the rate customers would pay on loans from banks.

The MPC explained that the decision was reached due to the ongoing effects of the coronavirus on a wide range of economic activities.

READ ALSO: Commercial banks in Ghana realize GHC3.3 billion profit in 2019

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