The Governor of the Bank of Ghana (BoG), Dr. Ernest Addison has called for increased preparedness to anticipate, adapt, and respond to emerging challenges in the financial sector.

This is due to increased interconnectedness the domestic economy is faced with heightened by external risks.

Speaking at the 28^th Annual Banking and Ethics Conference organised by the Chartered Institute of Bankers, Dr. Addison, said the Central Bank has committed to decisive measures to strengthen the financial sector through regulatory reforms to enhance risk management practices, capital requirements, corporate governance, and other measures.

These, he believed, will help reinforce transparency and market discipline. Recently, the BoG introduced directives in the areas of sustainable banking principles, Climate-Related Financial Risk, Outsourcing and Cyber and Information Security Directive to drive responsible banking practices.

Digital Transformation and Cybersecurity

As digital banking gains prominence, its associated risks have also become imminent.

The Governor said data privacy and security risk, cyber threats and the consequent potential liabilities and reputational risks pose significant danger to financial stability. This has required intensification of efforts to establish robust cybersecurity frameworks across the sector.

In view of this, Dr. Addison said the Central Bank recently launched the Financial Industry Command Security Operations Centre (FISOC) to improve cybersecurity resilience in the banking sector.

In addition, he pointed out that banks are being encouraged to invest in advanced technologies and capacity-building to keep pace with the rapid digital transformation, while maintaining comprehensive cybersecurity frameworks to prevent breaches and ensure data privacy.

Stress Testing and Macroprudential Surveillance

On stress testing and macroprudential surveillance, the Governor pointed out that given rising economic uncertainties in recent times, the his outfit has enhanced its stress-testing framework to evaluate the resilience of banks under adverse conditions.

“By assessing potential vulnerabilities early, corrective measures can be implemented to mitigate the impact of economic shocks. The Bank’s macroprudential surveillance framework is continuously refined to detect risks and prepare to counter disruptions before they materialize”, he added.

Adaptive Business Model

The Governor also announced the introduction of a Business Model Analysis (BMA), a key component of its supervisory frameworks to enable supervisors identify banks' vulnerabilities at an early stage and helps to ensure their safety and soundness.

“We have recently issued an exposure draft of our methodology for assessing the viability of banks business model to the industry, which we will soon finalise for adoption. Business model analysis has the potential to enhance bank supervision and make it more effective, proactive and forward-looking, and would be our next examination thematic review next year”, he added.