Central Bank borrows GHS 966m at 29.9% interest cost
The Central Bank on Wednesday borrowed GHS 966 million through the issuance of its own bills known as the Bank of Ghana (BoG) bills with a maturity period of 56 days.
The auction, which took place on November 22, 2023, saw the central bank selling short-term securities on the primary market to regulate money supply and manage liquidity in the banking system.
The interest rate at which the BoG bills were auctioned stood at 29.9%.
While the value of bids made by commercial banks was not disclosed, the auction outcome highlights the central bank’s ability to attract funding from the domestic financial market in support of its monetary policy objectives.
The BoG bills are typically used in Open Market Operations (OMO), which are monetary policy tools used by central banks to manage money supply.
Through OMO, the central bank can influence the cost and availability of credit in the economy by adjusting the supply of money in circulation.
Moreover, the main function of central bank bills, like the BoG bills, is to manage the liquidity of the banking system by selling short-term securities on the primary market.
This helps the central bank regulate the amount of money in circulation and ensure financial stability.
