The Bank of Ghana (BoG) has announced plans to gradually revise the Cash Reserve Ratio (CRR) for commercial banks, signaling a move toward more flexible liquidity management in the banking sector. Dr. Johnson Asiama, the Governor of the Bank of Ghana, emphasized that the review will be carried out in phases to avoid unintended economic disruptions.
This decision comes after the BoG’s 2023 move to raise the CRR from 12% to 14% as part of efforts to tighten liquidity and help stabilize inflation. The increase was aimed at curbing excess liquidity in the market and boosting the ongoing disinflation process. However, the higher CRR has raised concerns among commercial banks, who argue that the elevated reserve requirements are limiting financial intermediation and increasing operational costs.
In light of these concerns, the central bank is considering adjustments that will allow banks more flexibility in lending, ultimately easing some of the financial constraints they currently face.
The BoG’s approach to reviewing the CRR highlights the central bank’s commitment to maintaining financial stability while also supporting the liquidity needs of the banking sector. As the review unfolds, both regulators and industry stakeholders will closely monitor its impact on the broader economy.
This move is expected to be part of the BoG’s broader strategy to balance inflation control with financial sector health in Ghana’s evolving economic landscape.
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