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Government has established the Ghana Financial Stability Fund (GFSF) with a target size of GH₵ 15 billion to be provided by the government and its development partners.
The Fund will provide liquidity to financial institutions that participate fully in the Domestic Debt Exchange.
A statement issued in Accra by the Financial Stability Council said all financial institutions (banks, SDIs, pension schemes, collective investment schemes, fund managers, broker/dealers, insurance firms) that fully participated in the Debt Exchange could access the Fund for augmented liquidity support, with effect from the date of completion of the Exchange.
It said the Fund would be managed by the Bank of Ghana under unique operational guidelines being developed by the Council.
The statement said the Council would provide ongoing advice and oversight for the use of the GFSF, including accounting treatment and regulatory Tools to Mitigate Financial Stability Risks from the Debt Operation.
It said the regulators were already in discussions with external auditors of financial institutions and would provide guidance to ensure a standardized approach to the accounting treatment applied to the Debt Exchange.
The statement said potential impacts on Debt Exchange on Financial Sector Stress tests have been conducted by the relevant financial sector regulators to estimate the potential impact of the Debt Exchange for banks, specialised deposit-taking institutions (SDIs), insurance
firms, asset managers, collective investment schemes, pension fund trustees, and regulated pension schemes, that could result from their participation in the debt exchange.
It said to help manage the potential impacts of the Debt Exchange on the financial sector, financial sector regulators would deploy all regulatory and supervisory tools to mitigate risks to financial stability.
“Regulators will assess impacts on a regular basis, and quickly address evolving risks in order to safeguard financial stability,” it said.
The statement said in keeping with its mandate, the Council would continue to closely monitor the impacts of the Debt Exchange on financial institutions and on the financial system, as well as the effectiveness of the measures outlined above.
These measures will be reviewed continuously and recalibrated as needed to ensure maximum effectiveness to safeguard the stability of our financial system and the protection of deposits, pensions, policyholders’ funds, and investor funds/assets.
