Commercial banks in Ghana will soon be required to hold cash reserves in the same currency as the deposits they receive, following a key policy revision by the Bank of Ghana (BoG).
The change, which takes effect on June 5, 2025, is part of amendments to the central bank’s Dynamic Cash Reserve Ratio (CRR) framework aimed at strengthening financial stability and improving monetary policy transmission.
Previously, banks were mandated to hold all reserves—currently set at 14%—in Ghana cedis, regardless of the currency of the deposits. This uniform reserve requirement had drawn criticism from banks, which argued that it constrained financial intermediation and raised operational costs.
With the revised policy, foreign currency deposits must now be backed by foreign currency reserves, while reserves for cedi deposits will continue to be held in local currency. The BoG says the move is intended to reduce currency mismatches on bank balance sheets and minimise risks to the financial system, ultimately promoting macroeconomic stability.
“This means that foreign currency reserves for foreign currency deposits and domestic currency reserves for domestic currency deposits,” BoG Governor Dr. Johnson Asiama explained at a press briefing, following the Monetary Policy Committee’s (MPC) May 2025 meeting.
The MPC also decided to maintain the benchmark policy rate at 28%, reflecting a cautious approach despite improvements in currency stability and broader macroeconomic indicators. The decision is aimed at anchoring inflation expectations, amid concerns that inflationary pressures could resurface later in the year.
According to the BoG, inflation is now expected to ease faster than previously projected, potentially reaching the medium-term target in the first quarter of 2026, assuming no major economic shocks occur. Nonetheless, the central bank noted that the current inflation rate remains elevated and warrants the continued tight monetary stance.
Source: myghanadaily
