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    Accra, GHANA: A woman holds 03 July 2007 in Accra a wad new currency, the new cedi, that Ghana put in circulation that day, although the old money will still be valid until the end of the year. Currently, the cedi is one of the least valued currencies in Africa: 9000 cedis equal one US dollar.   Ernest Addison, head of research at the Bank of Ghana, assured in November 2006 that the changeover was not a revaluation nor devaluation, and will not affect foreign exchange.  AFP PHOTO / ISSOUF SANOGO (Photo credit should read ISSOUF SANOGO/AFP/Getty Images)

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    VEPEAG, GAVEX partner to boost vegetable production, exports in Ghana

    VADUG members resist implementation of Customs Amendment Act

    Cost of credit to further go up as Bank of Ghana raises policy rate to 22%

    Emergency MPC meeting: Goldman Sachs projects 200 basis points hike in policy rate

    MTN Ghana introduces voucher distribution denomination change to prevent price disparity

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    Accra, GHANA: A woman holds 03 July 2007 in Accra a wad new currency, the new cedi, that Ghana put in circulation that day, although the old money will still be valid until the end of the year. Currently, the cedi is one of the least valued currencies in Africa: 9000 cedis equal one US dollar.   Ernest Addison, head of research at the Bank of Ghana, assured in November 2006 that the changeover was not a revaluation nor devaluation, and will not affect foreign exchange.  AFP PHOTO / ISSOUF SANOGO (Photo credit should read ISSOUF SANOGO/AFP/Getty Images)

    Local currency crosses ¢10 to one dollar mark on retail market

    VEPEAG, GAVEX partner to boost vegetable production, exports in Ghana

    VADUG members resist implementation of Customs Amendment Act

    AUDA-NEPAD holds workshop for Youth and Media on AU Year of Nutrition

    Cost of credit to further go up as Bank of Ghana raises policy rate to 22%

    PURC justifies upward review of utility tariffs

    Emergency MPC meeting: Goldman Sachs projects 200 basis points hike in policy rate

    MTN Ghana introduces voucher distribution denomination change to prevent price disparity

    BoG, UG partner to improve research in Ghana’s financial sector

  • Business
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    • Manufacturing
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    • Mining
    • Oil And Gas
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    • Transport

    VEPEAG, GAVEX partner to boost vegetable production, exports in Ghana

    VADUG members resist implementation of Customs Amendment Act

    Cost of credit to further go up as Bank of Ghana raises policy rate to 22%

    Emergency MPC meeting: Goldman Sachs projects 200 basis points hike in policy rate

    MTN Ghana introduces voucher distribution denomination change to prevent price disparity

    BoG, UG partner to improve research in Ghana’s financial sector

    BoG, EOCO deepen collaboration to build robust financial sector

    Cedi Depreciation: Government urged to enforce laws on pricing in dollars

    Assistant Director, Fintech and Innovation, BoG, Clarence Blay

    E-cedi will not affect MoMo business – Bank of Ghana

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    MTN Ghana introduces voucher distribution denomination change to prevent price disparity

    We’re ready to re-engage gov’t on acquisition of Vodafone shares – Telecel

    New deadline for SIM re-registration too short – MoMo agents association

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    Vodafone agrees sell stake in Ghana’s business to Telecel

    Telecoms Chamber and IIPGH advocate sustained coding education

    IIPGH to enter coding education partnership with Telecoms Chamber

    PayAngel joins Microsoft for Startups Founders Hub

    Node 8, HTU hold first edition of Node X in Ho

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    • Asia
    • Europe
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    AUDA-NEPAD holds workshop for Youth and Media on AU Year of Nutrition

    Agribusiness entrepreneurs must take advantage of AfCFTA – ADB MD.

    Inflation, debt, and forex crisis is pushing many African economies to the brink – IMF warns

    African countries that could follow Sri Lanka into economic chaos

    Africa’s internet economy to cross $180 billion by 2025: Report

    Regional economic cooperation needed to enhance Africa’s competitiveness – Bawumia

    Ivory Coast is set to receive $26.1 billion worth of development finance from 4 lenders, the EU and France

    Gulf central banks, Bank of England raise policy rates after Fed hike

    US Fed meets inflation surge with 75bp hike

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Restrict banks’ investment in gov’t securities- Analyst

bycitibusinessnews
August 6, 2014
in Banking And Finance, Business, Top Stories
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Economic and Investment analyst, Kofi Arkaah is asking the Bank of Ghana to introduce a law to cap how much commercial banks can invest in government securities.

This follows reports of a number of banks who are currently investing heavily in government treasury bills, notes and bonds because of the high returns offered.

The Ghana Commercial Bank (GCB), for instance had about 50% of its total assets in government securities as at the end of last year.

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This phenomenon is blamed by analysts on the low level of capital available to the private sector for growth.

The 91-day Treasury bill is currently at 25.0104% and 182-day at 26.2519%.

Analysts have also predicted it could go as high as 30 percent by next year.

Kofi Arkaah told Citi Business News, this could significantly impede the growth of the private sector and the economy.

According to him “Bank of Ghana should implement a new regulation or policy which will cap the percentage of government’s assets they (banks) can hold on their balance sheet.”

“We can look at the numbers and do some modelling to figure out what the appropriate cap should be”, he said.

He stated that  if this is done, there will be more capital available to the private sector.

“There, the banks will take on more risk, because they need to make returns.”

However Senior Economist at the institute of Economic Affairs, Dr John Kwakye disagrees.

According to him, having the cap on how much commercial banks can invest will bring too many controls into the banking system.

“The limit should rather be put on the budget”, he said.

“It should be placed on the budget deficit. You don’t blame banks for lending to government, it is a commercial (venture). You will be putting too many controls in the system. Let’s operate the market as it is”, he emphasized.

Dr kwakye indicated that the fact that banks do not want to lend to private sector or to agriculture or to small scale enterprises “is a market failure”

“That doesn’t mean you should abolish the market. Government must recognize pockets of market failure,” he added.

 

By: Kwaku Anim Boadu/citifmonline.com/Ghana

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Accra, GHANA: A woman holds 03 July 2007 in Accra a wad new currency, the new cedi, that Ghana put in circulation that day, although the old money will still be valid until the end of the year. Currently, the cedi is one of the least valued currencies in Africa: 9000 cedis equal one US dollar.   Ernest Addison, head of research at the Bank of Ghana, assured in November 2006 that the changeover was not a revaluation nor devaluation, and will not affect foreign exchange.  AFP PHOTO / ISSOUF SANOGO (Photo credit should read ISSOUF SANOGO/AFP/Getty Images)
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