The Bank of Ghana (BoG) is considering adopting a new policy that will deny private individuals and some corporate institutions the opportunity to open and maintain foreign accounts with banks in the country, two sources close to the negotiations on the matter have said.
The successful adoption and implementation of the policy will mean that individuals and institutions will not be allowed to have any accounts apart from cedi accounts. Existing foreign accounts held by individuals and the affected institutions will then be closed after the foreign currencies are all sold for cedis.
Some corporate institutions would, however, be allowed to open and maintain foreign accounts, the sources added.
They said foreign remittances “will be changed to cedis at the point of collection” should the policy come into effect.
“It is difficult for me to imagine why an individual in Ghana should be allowed to keep a dollar account. What that means is the said individual is engaging in currency trading. That is not good, given that those people will sell or buy dollars, depending on speculation about the market,” one source said.
The new policy, currently under consideration by the central bank, industry players and commercial banks in the country, is part of initiatives aimed at stabilising the value of the cedi against its trading partners and stopping the wide switch to the dollar as an alternative medium for transactions in the country.
Attempts to get the BoG to comment on the matter failed.
The cedi has, since January, this year lost about 20 per cent of its value to major currencies, causing the central bank to come up with a series of initiatives, all aimed at mopping up excess dollars and foreign currencies in general in the system to stabilise the cedi’s value against these currencies.
Existing regulations in the banking sector currently allow individuals and institutions to open and maintain foreign accounts with the banks in which dollars, pounds, euros, among other currencies, are deposited.
The central bank, according to the sources, had realised that those foreign account holders always exchanged their cedis for foreign currencies “whenever they become fearful that the value of the cedi will fall”.
“One bank alone has about US$200 million deposited in individual foreign currency accounts. Imagine how much it will be if all individual foreign accounts of the 27 banks in the country are added up.
“That is generating unnecessary pressure on the cedi,” the sources said.
The BoG, according to the sources, was now aiming at discouraging that habit to lessen the amount of foreign currencies, especially dollars, in the system.
The President of the Ghana Association of Bankers (GAB), Mr D. K. Mensah, confirmed that the association, together with the industry regulator, the BoG, “is working something out” to help fight the depreciation but declined to say if it bordered on foreign accounts.
“It is a stakeholder affair and we are all working on it,” he said.
The Executive Secretary of the Centre for Policy Analysis (CEPA), Dr Joe Abbey, said the move, if implemented, could help halt the cedi’s depreciation.
“The BoG is doing its best to check speculative demands for the foreign currencies and we must appreciate that,” Dr Abbey said.
Source: Maxwell Adombila Akalaare/D-graphic
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