It is illegal for anyone or entity to transact business in Ghana with any currency apart from the Ghana cedi, the Governor of the Bank of Ghana, Dr Henry Kofi Wampah, has affirmed.
He said the central bank had taken steps to engage corporate institutions, especially in the automobile industry, in discussions with the view to discouraging them from such practices, adding that if the education did not succeed, the BoG would be compelled to apply the law.
“We need to have education to encourage people to do the right thing,” Dr Wampah said at the University of Ghana, Legon, last Wednesday.
Answering questions after delivering a keynote address at a public discussion organised by the Institute of Statistical, Social and Economic Research (ISSER) of the university, Dr Wampah said the BoG was closely monitoring the situation.
Panellists at the discussion addressed the topic “What does it take to build a stable and efficient financial sector for sustained growth and structural transformation in Africa”.
The hospitality and automobile industries have been cited as prime culprits in the phenomenon of transacting business in foreign currencies, especially the dollar, in what is popularly referred to as the ‘dollarisation’ of the economy.
The festering of ‘dollarisation’, in spite of several directives issued by the BoG against same, gives the impression that the central bank is only barking and not biting.
But Dr Wampah believes the approach adopted by the BoG to educate the stakeholders on the need to desist from such practices was a good intervention. He said the BoG was also trying to encourage commercial banks to keep their reserves in local currency instead of foreign currency.
He said there was no need for people to change local currency into foreign currency for saving in the bank, and urged commercial banks to discourage the practice by their customers.
Dr Wampah said the central bank had a policy of promoting financial inclusiveness, such as the introduction of the e-zwich banking system, although, he admitted, it had not worked as expected.
He said the BoG had also been promoting mobile banking, adding that it had licensed three mobile telecommunication operators – MTN, TiGO and Glo – to deliver that service.
Dr Wampah said the BoG had also licensed about 300 micro finance institutions, but noted that many others were operating without licence.
“Policing the number of micro finance institutions is not a small joke,” he remarked, adding that the central bank had established a department to oversee activities in that sector.
Sound, stable financial sector
In his keynote address, Dr Wampah noted that building a sound, stable and efficient financial sector was indispensable for sustained economic growth and structural transformation.
“This is why reform effort in the financial sector which have been ongoing for the past several years, remain key. “Although appreciable progress has been made since such reforms started in the 1980s, in terms of depth, access, efficiency and stability in the financial system, there remains a significant gap in policy and institutional reform that must be addressed going forward,” he said.
Dr Wampah said it was also imperative to undertake pension reforms and create appropriate legal and institutional frameworks to facilitate long-term savings.
“We must continue to enhance the conduct and implementation of monetary policy by constantly improving the framework for managing liquidity and deepening financial markets to improve the transmission and effectiveness of monetary policy actions,” he said.
The panellists in the discussion were the Head of the International Economic Development Group, Dr Dirk Willem Velde; a former Deputy Governor of the Central Bank of India, Dr Usha Tharat; a Senior Research Advisor at the Japan International Cooperation Agency, Prof. Akio Hosono; a Senior Research Fellow at ISSER, Dr Charles Ackah, and a financial economist, Dr Sam Mensah.
The programme was chaired by the Vice Chancellor of the University of Ghana, Prof. Ernest Aryeetey.
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