In a decisive move to curb currency risk and strengthen Ghana’s financial system, the Bank of Ghana (BoG) has introduced a revised cash reserve policy requiring commercial banks to match reserves with the currency of customer deposits.
Effective June 5, 2025, this shift in the Dynamic Cash Reserve Ratio (CRR) framework mandates that foreign currency deposits be backed by foreign currency reserves, while Ghana cedi deposits must be supported by cedi reserves.
Until now, banks maintained all reserves in cedis, regardless of deposit origin, a practice meant to tighten liquidity and battle inflation. However, it also created vulnerabilities by exposing banks to currency mismatches—an issue the BoG now seeks to correct.
“This change is a structural safeguard against macroeconomic instability,” said Governor Dr. Johnson Asiama during the May 2025 Monetary Policy Committee (MPC) briefing. “It will help insulate banks from exchange rate shocks and strengthen financial intermediation in a more balanced way.”
While banks have expressed concern over increased operational complexity and potential cost implications, the central bank insists the long-term benefits—such as improved risk management and enhanced monetary policy effectiveness—outweigh short-term disruptions.
The revised CRR is part of a broader policy stance to consolidate recent economic gains, including a 24.1% appreciation of the cedi and slowing inflation. However, the BoG retained the key policy rate at 28%, citing persistent inflationary threats and the need to anchor market expectations.
According to Dr. Asiama, inflation is projected to decelerate more quickly than expected, potentially reaching the medium-term target by Q1 2026—assuming no major economic shocks.
As the financial sector adapts to this dual-reserve structure, analysts say the policy could signal a new era of currency discipline and risk-based banking regulation in Ghana.
