By Francis Ntow
Accra, May 09, GNA – Godfred Alufar Bokpin, a professor of finance at the University of Ghana, has advocated for the repositioning of the Financial Stability Council above the Bank of Ghana (BoG).
Prof. Bokpin, who is also an Economist, said, that would ensure enhanced supervision and accountability in the banking and financial sector and engender fiscal discipline.
He said the Council would also help in ensuring that the Central Bank did not finance budget deficits as seen in 2022, where the Government received some GHS42 billion from the Bank, contributing to the country’s debt crisis.
He was speaking to the Ghana News Agency on ways to maintain fiscal discipline from the perspective of the Central Bank financing, noting that the current arrangement made room for slippages.
The Government in 2018, established a Financial Stability Advisory Council to identify and evaluate threats, vulnerabilities, and risks to the stability of the financial sector.
The Council, per its current structure, is headed by the Governor of the Central Bank, a situation that Prof. Bokpin said should change for the Council to have a supervisory role over the Bank and other sector regulators.
“There has to be an arrangement that makes the Central Bank accountable and a good way to do so is to have the Financial Stability Council above BoG.” Prof. Bokpin said.
He, therefore, called for a redesigning of the central bank architecture to separate banking supervision and market conduct from pure central bank activities, noting that, doing so, “will allow for checks and balances.”
He explained that the current arrangement where the Central Bank issued licences to banks and presided over market conduct and supervision, did not augur well for the financial sector.
“What if there’s a of conflict in issuance of licence?” he quizzed, and called for stakeholder collaboration for reforms that would situate the Financial Stability Council above BoG and supervise its activities.
The Council, he proposed, should be composed of people of reputable standing in society with deep financial and monetary insight into the Ghanaian economy, and capable of being resolute about their decisions.
With such an arrangement, BoG, Social Security and National Insurance Trust (SSNIT), National Pensions Regulatory Authority (NPRA), Securities and Exchanges Commission (SEC) would all be accountable to the Council, he said.
“That will make their actions to be reviewed independently, and their report [including risks and vulnerabilities] on a quarterly basis submitted to Parliament for consideration and that should be mandatory.” Prof Bokpin said.
The Council, when established and allowed to do its work without any political interference, it would convey meaning to the market that the country could be trusted for economic stability beyond an IMF programme, he said.
GNA