Covid-19: Enhanced regulation, supervision required to sustain financial sector recovery – BoG
The Central Bank has said that despite Ghana’s financial system proving resilient to the COVID-19 pandemic on the back of timely policy interventions by financial sector regulators, enhanced regulation and supervision of the sector is required to ensure the sustenance of the sector’s recovery from the pandemic.
According to the Central Bank, enhanced regulation and supervision of the financial sector is needed to ensure that spillover risks from the COVID-19 pandemic are well contained.
Giving an overview of how the country’s financial sector faired in 2020 amid the heat of the pandemic, the Central Bank in its 2020 Financial Stability Review report, noted that the banking sector proved resilient to shocks over the review period with results of several stress tests showing that the banking industry remained robust to credit, exchange rate, interest rate and liquidity shocks.
At end-December 2020, the financial soundness indicators for the banking industry indicated strong capital, liquidity and profitability levels, despite a marginal decline in asset quality.
Also, the insurance industry remained generally positive in 2020 with gross premiums and the industry’s capital base increasing by 20.6 percent and 15 percent respectively.
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The gains made in the review year, are expected to further improve in the near-to-medium term, with the anticipated passage of the new insurance bill and the enforcement of the new Minimum Capital Requirement (MCR).
In the securities industry, total Assets Under Management (AUM) recorded 8.04 per cent growth in 2020, on the back of an increase in pension funds under management, despite the license revocation of 53 fund management companies.
On the local bourse, the Ghana Stock Exchange (GSE) recorded a bearish performance. Developments on the GSE was characterised by a 4.4 per cent loss in market capitalisation and a negative 13.98 per cent end-of-year return. These developments were attributed to low demand and excess supply of equity stocks in light of uncertainties from the COVID-19 pandemic.
The pensions industry also maintained a strong growth momentum, as the public pension fund administered by the Social Security and National Insurance Trust (SSNIT) rebounded from contraction in the previous years to 26 per cent growth in 2020.
The industry’s performance was due to the rapid growth of private pension funds, the partial settlement of government indebtedness to the Tier 1 scheme, and the implementation of timely COVID-19 related initiatives and regulatory developments aimed at enhancing the general outlook of the pensions industry.
