Dr Johnson Pandit Asiama is the BoG Governor

The Bank of Ghana (BoG) has announced that, effective June 5, 2025, commercial banks will be required to hold cash reserves in the original currencies in which deposits were made.

According to the Central Bank, this policy adjustment is intended to strengthen financial sector stability and improve the transmission of monetary policy.

The decision follows the BoG’s amendment of its Dynamic Cash Reserve Ratio (CRR) framework, which currently stands at 14%.

Previously, the CRR mandated banks to hold all reserves in the domestic currency (cedi) as a measure to tighten liquidity and stabilize inflation.

The BoG made the announcement during the Monetary Policy Committee’s (MPC) press conference held on May 23, 2025.

“The Committee decided to amend the Dynamic Cash Reserve Ratio (CRR) as follows: The CRR for all banks will now be maintained in their respective currencies. This means that foreign currency reserves will back foreign currency deposits, and domestic currency reserves will back domestic currency deposits. This policy measure will take effect on June 5, 2025,” the Governor said.

The revised policy aims to address concerns related to reserve requirements. Starting in June, foreign currency deposits will be backed by reserves held in the corresponding foreign currencies, while cedi deposits will continue to be backed by cedi reserves.

The Central Bank explained that this measure is also intended to reduce currency mismatches on bank balance sheets and minimize systemic risks, thereby supporting macroeconomic stability.

Additionally, in light of current inflationary pressures and exchange rate developments, the BoG decided to maintain the monetary policy rate at 28%.

“The latest forecast points to continued easing of inflationary pressures, supported by a tight monetary policy stance, exchange rate stability, and fiscal consolidation. Inflation is now expected to ease faster and reach the medium-term target in the first quarter of 2026, rather than the second quarter as previously projected, barring any unanticipated shocks,” the Governor said.

“Despite these positive developments, the Committee observed that the current level of inflation remains high relative to the medium-term target and thus decided to maintain the policy rate at 28.0%,” he added.

SSD/MA