BoG to Introduce New Bank Resolvability Framework to Strengthen Banking Sector Resilience
In a bid to ensure greater resilience within Ghana’s banking sector, Governor of the Bank of Ghana, Dr. Johnson Asiama, has announced plans to refine the central bank’s supervisory and resolution tools.
This includes the introduction of a Resolvability Assessment Framework aimed at ensuring banks are well-capitalized and prepared for potential distress, especially in an increasingly interconnected financial system.
Speaking at the maiden Post-Monetary Policy Committee (MPC) meeting with Chief Executive Officers of commercial banks, Dr. Asiama highlighted that the framework is a result of lessons learned from previous bank resolutions and will play a crucial role in the Bank’s crisis preparedness.
The Governor, speaking at the meeting underscored the need for a shift in supervisory practices, emphasizing the importance of adopting a forward-looking and risk-sensitive approach to supervision.
He stated, “To build true resilience, we must move decisively beyond traditional, reactive supervision toward a more forward-looking, risk-sensitive, and system-aware model.”
Key areas of focus in this new supervisory strategy include:
Risk Identification and Mitigation: The Bank of Ghana is enhancing its use of data analytics and early warning indicators to better identify emerging risks across various domains such as asset quality, cybersecurity, fraud, liquidity, and the buildup of non-performing loans. The 2024 Fraud Report, which showed a 5% increase in fraud cases and a 13% rise in the value at risk, further emphasized the need for stronger internal controls.
Digital Resilience: While digital innovation is encouraged, the Governor stressed that it must be accompanied by robust cybersecurity and operational resilience. He urged banks to invest significantly in product security features, customer protection, and public financial education, with an emphasis on rapid response to emerging fraud threats.
Governance and Compliance: Strengthening governance structures and compliance culture at the core of banks is critical to ensuring sustainable operations. The Bank of Ghana is intensifying its focus on board effectiveness and accountability across all levels of banks. Additionally, the consideration of compulsory Basel III and IV training for all bank directors is underway to enhance their regulatory knowledge.
Collaboration with Stakeholders: Dr. Asiama emphasized that effective regulation requires an open, collaborative approach with both banks and policymakers. The goal is to co-create solutions and ensure regulatory responses are well-informed and proportionate to market realities.
Building Capacity for Future Challenges: Recognizing the rapid evolution of risks such as AI in finance, climate shocks, and geopolitical volatility, the Bank of Ghana is investing in upskilling its supervisory teams to adapt to these emerging complexities. This is part of a broader strategy to future-proof the Bank’s regulatory capabilities.
Sustainability Oversight: The Bank of Ghana has integrated Environmental, Social, and Governance (ESG) and climate-related risks into its onsite examinations. These issues are increasingly recognized as central to credit risk, reputational exposure, and long-term viability, and will influence supervisory expectations moving forward.
Concluding his remarks, the Governor reiterated the Bank’s commitment to supporting commercial banks through policy, dialogue, and collaboration.
He expressed confidence that these initiatives will lead to a stronger, more resilient, and inclusive financial system that serves the interests of all Ghanaians.
Dr. Asiama also reflected on the six priorities he outlined at his swearing-in, which include strengthening monetary policy, preserving exchange rate stability, deepening financial intermediation, advancing innovation and inclusion, improving coordination while safeguarding the Bank’s independence, and restoring the Bank’s equity position.
He assured stakeholders that these priorities would continue to guide the Bank’s path toward building a more resilient financial system.
