Government establishes GH₵15b Ghana Financial Stability Fund
The Fund will provide liquidity to financial institutions that participate fully in the Domestic Debt Exchange.
A statement issued in Accra by the Financial Stability Council said all financial institutions (banks, SDIs, pension schemes, collective investment schemes, fund managers, broker/dealers, insurance firms) that fully participated in the Debt Exchange could access the Fund for augmented liquidity support, with effect from the date of completion of the Exchange.
It said the Fund would be managed by the Bank of Ghana under unique operational guidelines being developed by the Council.
The statement said the Council would provide ongoing advice and oversight for the use of the GFSF, including accounting treatment and regulatory Tools to Mitigate Financial Stability Risks from the Debt Operation
It said the regulators were already in discussions with external auditors of financial institutions and would provide guidance to ensure a standardized approach to the accounting treatment applied to the Debt Exchange.
The statement said potential impacts on Debt Exchange on Financial Sector Stress tests have been conducted by the relevant financial sector regulators to estimate the potential impact of the Debt Exchange for banks, specialised deposit-taking institutions (SDIs), insurance firms, asset managers, collective investment schemes, pension fund trustees, and regulated pension schemes, that could result from their participation in the debt exchange.
It said to help manage the potential impacts of the Debt Exchange on the financial sector, financial sector regulators would deploy all regulatory and supervisory tools to mitigate risks to financial stability.
“Regulators will assess impacts on a regular basis, and quickly address evolving risks in order to safeguard financial stability,” it said.
The statement said in keeping with its mandate, the Council would continue to closely monitor the impacts of the Debt Exchange on financial institutions and on the financial system, as well as the effectiveness of the measures outlined above.
These measures will be reviewed continuously and recalibrated as needed to ensure maximum effectiveness to safeguard the stability of our financial system and the protection of deposits, pensions, policyholders’ funds, and investor funds/assets.
On December 5, 2022, the Government of Ghana launched Ghana’s Domestic Debt Exchange programme, an invitation for the voluntary exchange of approximately GH₵137 billion of the domestic notes and bonds of the Republic, including E.S.L.A. and Daakye bonds, for a package of New Bonds to be issued by the Republic.
The Exchange excludes Treasury Bills in totality, and notes and bonds held by individuals.
The Council was established in December 2018 Regulatory Forbearance on Liquidity and Solvency Financial sector regulators will temporarily reduce regulatory capital and liquidity requirements for regulated firms and schemes that voluntarily participate in the debt operation.
Regulators will also suspend or delay any new rules that will have an adverse impact on liquidity or solvency. Each regulator will communicate more specific reliefs to its regulated firms/schemes in due course.