The Dean of the Faculty of Accounting and Finance, UPSA and Executive Director of the Institute of Economic Research and Policy (IERPP), Professor Isaac Boadi, says while Ghana’s banking sector has made commendable strides in stability and transparency, the Bank of Ghana (BoG) must tread carefully with its latest regulatory reforms to avoid unintended consequences that could undermine progress.

“Regulations must safeguard stability, not choke growth,” Prof. Boadi cautioned, urging the central bank to adopt a phased, data-driven approach to reform implementation.

The BoG’s new regulatory framework touches on critical aspects of banking operations, from reserve requirements to digital lending and crypto oversight. While many measures show promise, IERPP’s review highlights areas that warrant closer attention and adjustment.

The first new measure to be introduced, effective June 5, 2025, is the Dual-Currency Reserve Requirement. Banks will be required to hold reserves in both domestic and foreign currencies. While this may help reduce forex volatility and improve central bank control, it could also restrict credit if reserve thresholds are set too high.

IERPP recommends a gradual rollout to prevent liquidity constraints.

The second new measure is Cap on Cross-Currency Card Transaction Fees (2%). This is simply to limit fees on international card transactions to 2 per cent. This will reduce costs for users but may erode bank revenues. IERPP recommends a tiered fee system could provide flexibility while protecting consumers. In 2024, cross-border transactions reached $1.8 billion, underscoring the measure’s potential impact.

The next initiative by BOG is the Mandatory Disclosure of Issuer Fees. This initiative will force banks to show all fees upfront during transactions. Enhancing transparency is a welcome move. However, standardising how fees are presented is crucial to avoid confusion and additional compliance burdens, IERPP recommends

The BoG introduces a No Interest on Inactive Credit Accounts. This will prohibit interest on dormant credit accounts. This initiative protects consumers but may prompt banks to restrict credit access. A clear definition of “inactive” (e.g., six months of no activity) is needed, IERPP recommends.

Digital Lending Guidelines to be by August 2025 is another initiative by BoG. As Ghana’s digital lending market grew by 40 per cent in 2024, regulations are vital. But overregulation could stunt innovation. Stakeholder consultations are key to striking the right balance, IERPP tells BoG.

Besides, the BoG introduces NPL Ratio Cap at 10 per cent by December 2026. What this initiative means is that Banks must maintain NPLs below 10 per cent of total loans. With Ghana’s current NPL ratio at 14.5 per cent, IERPP warns that enforcing a sudden cap could force banks into aggressive write-offs, reducing credit availability. A phased approach with performance-based incentives is recommended.

Local Governance for Foreign-Owned Banks is the seventh initiative by BoG. This initiative states that Foreign banks must meet local governance standards (e.g., independent boards). Requiring local independent boards could improve accountability but may raise costs. Since foreign banks hold 40 per cent of banking assets, overly rigid policies could deter investment, IERPP cautions BoG.

Furthermore, BoG informs banks to Review of Pricing Models. This initiative requires banks to simplify and justify fees. Eliminating opaque charges builds trust. However, short-term bank revenues may dip. Regular regulatory audits will be essential for compliance, IERPP warns BoG.

The nine initiative focuses on Public Listing of Blacklisted Borrowers. This initiative forces the Banks to mandatory publish the list of defaulters publicly. While this promotes discipline, privacy safeguards are essential to prevent legal and reputational risks, IERPP warns BoG to tread cautiously.

Finally, the BoG tells Banks to Strengthened AML/CFT for Crypto. This initiative seeks tighter anti-money laundering rules for crypto transactions. This reduces illicit finance risks but could hinder crypto growth. IERPP urges a balanced regulatory posture that supports fintech innovation while ensuring compliance.

IERPP recognises the BoG’s commitment to financial integrity and resilience. However, reforms must be executed with precision and consultation to maintain momentum without triggering counterproductive effects.