Executive Director of IERPP, Prof. Isaac Boadi
The Executive Director of the Institute of Economic Research and Policy (IERPP), Prof. Isaac Boadi, has urged the Bank of Ghana (BoG) to be cautious with its latest regulatory reforms, warning that poorly executed policies could hamper progress in the banking sector.
According to Prof. Boadi, while Ghana’s banking industry has made commendable strides in stability and transparency, the central bank must ensure that new regulations do not have unintended consequences.
“Regulations must safeguard stability, not choke growth,” he cautioned, urging the BoG to adopt a phased, data-driven approach to reform implementation.
The Bank of Ghana’s latest regulatory framework addresses various aspects of banking operations, including reserve requirements, digital lending, and cryptocurrency oversight.
Below are IERPP’s review on areas that warrant closer attention and adjustment.
1. Dual-Currency Reserve Requirement (Effective June 5, 2025). Banks will be required to hold reserves in both domestic and foreign currencies. While this may help reduce forex volatility and improve central bank control, excessively high reserve thresholds could restrict credit availability. IERPP recommends a gradual rollout to prevent liquidity constraints.
2. Cap on Cross-Currency Card Transaction Fees (2%). The measure limits fees on international card transactions to 2%, reducing costs for users but potentially eroding bank revenues. IERPP suggests a tiered fee system to balance flexibility and consumer protection, especially since cross-border transactions reached $1.8 billion in 2024.
3. Mandatory Disclosure of Issuer Fees. This initiative requires banks to display all fees upfront during transactions, enhancing transparency. However, IERPP warns that standardizing fee presentation is crucial to prevent confusion and additional compliance burdens.
4. No Interest on Inactive Credit Accounts Banks will be prohibited from charging interest on dormant credit accounts—a move to protect consumers but one that could lead banks to restrict credit access. A clear definition of “inactive” accounts, such as six months of no activity, is recommended.
5. Digital Lending Guidelines (By August 2025). With Ghana’s digital lending market growing by 40% in 2024, regulations are necessary. However, overregulation could hinder innovation. Stakeholder consultations are key to striking the right balance, according to IERPP.
6. NPL Ratio Cap at 10% (By December 2026). Banks must maintain Non-Performing Loans (NPLs) below 10% of total loans. Given Ghana’s current NPL ratio of 14.5%, IERPP warns that a sudden cap could force banks into aggressive write-offs, reducing credit availability. A phased approach with performance-based incentives is recommended.
7. Local Governance for Foreign-Owned Banks Foreign banks must meet local governance standards, including having independent boards. While this may improve accountability, IERPP cautions that it could raise operational costs and deter investment, as foreign banks hold 40% of Ghana’s banking assets.
8. Review of Pricing Models Banks must simplify and justify fees, eliminating opaque charges to build consumer trust. While this could reduce bank revenues in the short term, regular regulatory audits will be essential for compliance, IERPP warns.
9. Public Listing of Blacklisted Borrowers Banks will be required to publish a list of loan defaulters. While this promotes financial discipline, privacy safeguards must be put in place to prevent legal and reputational risks, IERPP advises.
10. Strengthened AML/CFT for Crypto. The Bank of Ghana seeks stricter anti-money laundering (AML) and counter-financing of terrorism (CFT) regulations for crypto transactions. While this will reduce illicit financial activity, it could also stifle crypto market growth. IERPP urges a balanced regulatory approach to support fintech innovation while maintaining compliance.
IERPP’s Position on BoG’s Reforms
IERPP acknowledges the BoG’s commitment to financial integrity and resilience but stresses that reforms must be executed with precision and stakeholder consultations to maintain momentum without triggering counterproductive effects.
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