A US-based Assistant Professor of Economics at Niagara University in New York, Dr. Dennis Nsafoah, says central banks should not be evaluated solely on accounting losses.

According to him, while the accounting losses are undeniable, it would be incorrect to evaluate a central bank solely on the basis of accounting profitability.

“Unlike private firms or commercial banks, central banks are not profit-maximising institutions. Their primary responsibilities include controlling inflation, preserving exchange rate stability and maintaining monetary credibility”, he disclosed in an article.

He argued that a central bank can therefore incur accounting losses while still successfully achieving its macroeconomic objectives.

“Indeed, many central banks globally have experienced periods of negative equity, accounting losses or sterilisation-related financial deterioration, while still maintaining effective monetary control and policy credibility. Consequently, central banks should be evaluated not solely on accounting profitability, but more importantly on policy solvency”, he opined.

He continued that policy solvency refers to the ability of a central bank to credibly and sustainably implement monetary policy in a manner consistent with macroeconomic stability. “Under this broader framework, accounting losses alone do not necessarily imply policy failure”.

Why the Bank of Ghana’s Policy Solvency Calculation Is Problematic

Although the Bank of Ghana was correct to shift the discussion toward policy solvency rather than accounting losses alone, Dr. Nsafoah said its specific attempt to demonstrate policy solvency in the 2025 report is problematic.

The Central Bank reported:

Item	2025
Operating income	GH¢22.23 billion
OMO cost	GH¢16.73 billion
Reported policy solvency	GH¢5.50 billion

Using these figures, the Bank of Ghana argued that operating income exceeded monetary policy implementation costs and therefore concluded that the institution remained policy solvent. However, Dr. Nsafoah said a closer examination of the composition of operating income reveals a major issue.

“A substantial portion of the reported operating income came from realised gains on gold sales”, he stated.

Item	2025
Net gain from sale of refined gold	GH¢9.57 billion

He said this is critically important, explaining that the positive policy solvency position was heavily dependent on one-time realised gains generated through the sale of reserve assets.

“From a policy solvency perspective, realised reserve asset sales should not be treated as recurring operational monetary income. A central bank cannot sustainably rely on the repeated liquidation of strategic reserve assets to finance recurring monetary policy operations. Once the gold-sale gains are excluded, the Bank’s own numbers imply:

Item	2025
Reported operating income	GH¢22.23 billion
Less: gold-sale gains	-GH¢9.57 billion
Adjusted recurring income	GH¢12.66 billion
OMO cost	GH¢16.73 billion
Revised policy solvency	-GH¢4.07 billion

Therefore, under the Bank’s own accounting-oriented framework, the institution would still be policy insolvent.