Banks to Hold Reserves in Same Currency as Deposits from June

Accra, Ghana - 24 May, 2025 - The Bank of Ghana (BoG) has introduced a significant policy adjustment to enhance financial sector stability and monetary policy transmission. As of June 5, 2025, commercial banks will be required to maintain cash reserves in the same currency as the deposits they hold.

This revision to the Dynamic Cash Reserve Ratio (CRR) framework means that foreign currency deposits will be backed by foreign currency reserves, while cedi deposits will be backed by local currency reserves.

The move aims to reduce currency mismatches on banks' balance sheets and minimize risks in the sector, ultimately promoting macroeconomic stability. According to BoG Governor Dr. Johnson Asiama, this policy measure is designed to deepen financial sector stability and enhance monetary policy transmission.

The decision was announced after the Monetary Policy Committee's (MPC) May 2025 meeting, which also saw the benchmark policy rate held steady at 28%. The MPC's cautious stance is aimed at anchoring inflation expectations amid lingering inflationary pressures, despite recent improvements in currency stability and macroeconomic indicators.

The Committee expects inflation to ease faster towards the medium-term target in the first quarter of 2026, driven by tight monetary policy, exchange rate stability, and fiscal consolidation.

However, the current level of inflation remains high, necessitating the maintenance of the policy rate at 28%.

“The Committee decided to amend the Dynamic Cash Reserve Ratio (CRR) as follows: The CRR for all banks will now be maintained in their respective currencies. This means that foreign currency reserves for foreign currency deposits and domestic currency reserves for domestic currency deposits. This policy measure will become effective on June 5, 2025”, Governor, Dr. Johnson Asiama announced as an additional policy measure.

“The latest forecast points to continued easing of inflationary pressures on the back of tight monetary policy stance, exchange rate stability, and fiscal consolidation. Inflation is expected to ease faster towards the medium-term target in the first quarter of 2026 as opposed to the second quarter as earlier envisaged, barring unanticipated shocks”, he added.

This policy adjustment is expected to have a positive impact on the financial sector, reducing risks and promoting stability. 

Source: Lead News Online