The Bank of Ghana will introduce new risk-management and corporate-governance regulations as part of measures to tighten its regulatory and supervisory responsibilities, First Deputy Governor Millison Narh has said.
According to him, the Central Bank is taking these steps to ensure that “only strong and well-managed banks operate in its jurisdiction.”
He said the regulations will be introduced after necessary consultations with the key stakeholders in the banking industry.
The Deputy Central Bank Governor was speaking at a fixed-income market forum organised by Barclays Africa in Accra. The forum brought together fund managers, banks and investors in Ghanaian bonds to deliberate on measures to develop the local bond market.
“The safety and soundness of the banking system hinges on adequate capital and good governance practices and risk-management systems,” Mr. Narh said, adding that a “vibrant, safe and sound banking system as well as stable macroeconomic environment is necessary to support a thriving bond market.”
The Central Bank in 2007 introduced Risk-Based Supervision in its oversight of banks, and this was complemented by a recapitalisation for all banks.
The Bank has also initiated steps toward reforming the Primary Dealer (PD) system to ensure that qualified PDs are given incentives through a well-defined privileges and responsibilities framework aimed at strengthening their market-making and underwriting abilities.
“We have developed the infrastructural base for the smooth-functioning of the bond market by establishing an efficient issuance, trading and settlement system of government securities.”
He said the BoG has embarked on reforms to improve the operation of the local bond market. These include the provision of a Primary Dealers’ code of conduct to inject efficiency and transparency into the market.
To ensure immediate settlement of traded securities in line with international standards, an electronic Real Time Gross Settlement System (RTGS) has also been developed by the Central Bank. This has been complemented by the establishment of a Central Securities Depository (CSD) which makes it possible for records of ownership of individual securities to be maintained centrally, reducing risks to investors that emanate from possible poor record-keeping or dealer malfeasance.
“The Central Securities Depository constitutes an important step in developing a market for government debt instruments and other securities to boost investor confidence,” he said.
Source: B&FT
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