Fiscal policy environment undermines BOG's ability to manage interest rate - Ashiabor
Institute deposit insurance schemes for
banking sector - ISSER boss
Stanchart MD speaks about need for cash-less
society
Accra (Greater Accra) 22 November
2000
Mr Alex Ashiabor, Chairman of the
Metropolitan and Allied Bank said on Monday that the prevailing volatile fiscal
policy environment compromises Bank of Ghana's ability to manage interest and
exchange rates.
"Whereas the Central Bank is
sufficiently endowed to perform its functions with regard to maintaining the
stability of the Cedi, the fiscal policy environment sometimes tends to
constrain and limit the bank's scope to manoeuvre, " he said.
Mr Ashiabor, a former governor of
the central bank, was speaking at the opening of the fourth "Bankers'
Week" celebration of the Chartered Institute of Bankers in Accra, which is
on the theme: "Effective Financial System, An Engine For Strong Economic
Growth."
The meeting has assembled people
representing various segments of the banking and financial sector to discuss
issues affecting the sector.
Mr Ashiabor said fiscal
performance this year has been dogged by recurring large deficits, resulting in
inflation and pressure on the exchange rate, despite a consensus at the
National Economic Forum to ensure fiscal balance at the beginning of the year.
He said the stability of the Cedi
is important in maintaining a healthy financial system so as to afford
producers, consumers and investors a stable means of payment in which they can
trust, adding that without it settlements among economic actors is not
possible.
He said Ghana's economic
environment now characterised by high inflation rate and price volatility,
calls for an effective credit system that would make funds available for asset
holders to meet their immediate obligations.
For banks to perform the role of
financial intermediation effectively, he said, there is the need for them to
satisfy investors' demand for funds at competitive prices.
He said, however, that the weak
performance of the long-term savings institutions and the failure of the
capital market to make available long-term funds for industry, agriculture and
real estate, has not made this possible.
This, Mr Ashiabor, said puts
pressure on the short and medium term financial institutions whose real
function is to provide working capital and trade finance.
He said the liberalisation of the
financial market and consequent expansion and competition put a heavy strain on
the sector's human resource pool.
Mr Ashiabor, therefore, called on
banks to intensify training to increase the quality of human resource to save
the sector from the risk of overpricing and diluted professional standards.
On savings, Mr Ashiabor said the
gross domestic savings rate of 13 per cent is inadequate to meet the long-term
objectives of vision 2020.
"There is the need to
intensify long-term savings mobilisation in order to achieve savings rates of
24 to 27 per cent to meet the objectives of vision 2020."
He said the insurance sector, a
source of long-term savings, is performing below its potential because of the
market dominance of the State Insurance Corporation.
Mr Ashiabor stressed the need to liberalise
the sector to open it up for competition and to enable it to contribute
effectively to long-term savings mobilisation.
For the capital market, he asked
the Ghana Stock Exchange to be proactive to create a wider debt instrument,
which can be traded on the secondary market.
The success of the banks to boost
economic growth, Mr Ashiabor said, depends on stability of the currency.
"Stability of the currency is
the surest guarantee to the protection of savings, and investment from erosion
and ensuring strong economic growth."
Mr John Saka Addo, Chairman of
Prudential Bank, who chaired the function said a stable economic environment
would enable the banks and other financial institutions to perform with
confidence to minimise losses.
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Institute deposit insurance schemes for
banking sector - ISSER boss
Accra (Greater Accra) 22 November 2000
The Director of the Institute of Statistical, Social and Economic Research, Professor Kwadwo Asenso-Okyere, on Monday advocated the institution of a deposit insurance scheme to create public confidence in the banking sector and prop up savings.
"There is the need to ensure the security of deposits with banks, " Prof. Asenso-Okyere told bankers at the Fourth Annual Banking conference in Accra.
The Institute of Chartered Bankers is organising the two-day conference on the theme: "Effective Financial System: An Engine For Strong Economic Growth," to discuss issues affecting the banking sector and how to solve them.
Prof. Asenso-Okyere spoke on the challenges in banking business in Ghana and said the freeze on bank accounts and persecution of people with deposits above a certain amount after military take-overs coupled with the recent liquidation of the Bank for Housing and Construction, Co-operative Bank and BCCI have eroded public confidence in banking.
Prof. Asenso-Okyere said the inability of some banks to meet customers' demand for large withdrawals of cash recently, has further contributed to public doubts. This may encourage some people to keep their money away from the banking system or not to add to their deposits.
"Although we do not want to encourage the use of large sums of money in transactions, there is the need to educate Ghanaians about it before the public is made cash-strapped," he said.
Prof. Asenso-Okyere, therefore, urged banks to comply with regulations in the banking law to restore public confidence in banking.
To reduce the risk in banking, the Bank of Ghana has revised the capital adequacy ratio for banks to the following: Ghanaian Banks five billion cedis, Foreign Banks eight billion cedis, Development Banks 10 billion cedis, Non-Bank Financial Institutions, 500 million cedis, and Loan and Saving Associations, 100 million cedis.
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Stanchart MD speaks about need for
cash-less society
Accra (Greater Accra) 22 November 2000
A good telecommunication infrastructure is essential if Ghana is to transform itself from a cash-based society to a cash-less one, Mr Joseph Abraham, Managing Director of Standard Chartered Bank said on Tuesday.
"The provision of a reliable high speed and secure data network will lay a good foundation and speed up the country's transition into a cash-less society," he said in an address to the Fourth National Bankers Conference in Accra.
He spoke on: "Changing Ghana Into A Cash-less Society - The Way Forward."
Mr Abraham said lack of public confidence in the use of cheques to settle transactions has contributed to large volumes of cash in the system.
This situation, he said, is exacerbated by the manual clearing process, which does not permit the early clearing of cheques.
Mr Abraham said currently about 60 per cent of transactions are done in cash, adding that this does not augur well for the development of a healthy financial system.
He said because the banks are not networked, transactions, which could be done in hours, take days to complete.
Mr Abraham therefore called for a working group to formulate a common standard to which all the banks would conform, saying there is the need for the banks to sacrifice short-term competitive advantages for long term goals.
He said the establishment of a cash-less society would demonstrate the economic progress and development of the country as well as the efficiency and effectiveness of its banking system.
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Accra (Greater Accra) 22 November 2000
The Ghana Association of Bankers, on Tuesday November 21, announced the following average inter bank exchange rates of the cedi equivalent to the dollar and derived rates for other major foreign currencies:
Currency Buying Selling
US Dollar 6,693.36 6,905.45
Pound Sterling 9,548.08 9,854.08
French Franc 869.06 896.06
Swiss Franc 3,735.85 3,852.11
Deutsche Mark 2,913.75 3,006.22
Canadian Dollar 4,302.49 4,437.37
Japanese Yen 60.87 62.77
Dutch Guilder 2,586.85 2,667.30
S/African Rand 864.10 890.33
Euro 5,700.69 5,877.77
CFA Franc 8.69 8.96
Naira 65.02 67.08
Ecowas/WAUA 8,433.98 -----------
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