The Institute of Economic Affairs (IEA) is calling for a strong legal system to support the Currency Board (CB) Lite System to achieve its goals.

It believes a strong legal system is key to support the board particularly the enforcement of the applicable rules.

"A strong legal system is key to support the board, particularly the enforcement of the applicable rules. It is essential because a currency board arrangement derives much of its credibility from the changes required in the Central Bank law".

The IEA had earlier proposed the establishment of a CB to limit the Central Bank lending to the government, a move it believes will stabilise the cedi and prevent instability in the economy in times of shocks.

It is, however, now calling for a Currency Board Lite System to reduce the limitations including possible loss of monetary policy independence and loss of exchange rate flexibility to respond to shocks.

"We would want to rather see a Currency Board Lite System for Ghana. This is essential to mitigate some of the disadvantages of a Currency Board. This would rather help in tightening the monetary and fiscal rules as well as enforcement and oversight regimes."

The institute also said a well-managed financial system is required for the system to be able to stand on its own without the lender of last resort opportunity that is available under a central bank but absent under a currency board.