WELCOME ADDRESS DELIVERED
BY
DR ERNEST ADDISON
GOVERNOR, BANK OF GHANA
AT
BANK OF GHANA 60TH ANNIVERSARY LECTURES AND EXHIBITION
AT
KEMPINSKI HOTEL, ACCRA
ON
AUGUST 18, 2017
Your Excellency, the President of the Republic of Ghana,
Your Excellency, the Vice President of the Republic of Ghana,
Distinguished Invited Guests
Board of Directors
Colleagues and Staff
Ladies and Gentlemen
1. I deem it a great pleasure and honour to welcome you all to this important
ceremony which climaxes the celebration of 60th Anniversary of the Bank of
Ghana-a significant milestone which is intertwined with the rich history of
Ghana's independence. This indeed calls for both celebration and sober
introspection. Before I proceed any further, let me say that we are privileged to
have H.E. President Nana Addo Dankwa Akufo-Addo to grace the occasion. Your
Excellency, we very much appreciate taking time off your busy schedule to come.
We also recognize the presence of H.E Vice President Alhaji Dr. Mahamudu
Bawumia, The Speaker of Parliament, Rt. Honorable Prof. Aaron Mike Ocquaye,
and the Chief Justice, Her Ladyship Sophia Akuffo.
2. I would also like to take this opportunity to recognize Governors from sister
institutions on this continent: Governors from BCEAO, Kenya, Lesotho, Mauritius,
Guinea, Mozambique, and Deputy Governors from South Africa, Botswana,
Nigeria, Sierra Leone, and Zambia. And finally, I also acknowledge the presence
of former Governors and Deputy Governors, who in various ways provided
invaluable services to the Bank of Ghana and shaped this unique course of
history.
3. Your Excellency, the chosen theme for this anniversary celebrations, "Celebrating
60 Years of Central Banking: Achievements, Challenges & Prospects", creates a
platform for sober reflection on our past and what was achieved, and where we
are heading as a central bank.
We have a series of planned events which chronicles the evolution of the Bank of
Ghana, including a high-level symposium on emerging issues that directly affect
the Bank's operations. We have also put in place an exhibition of old currencies,
documentation and pictures to capture the Bank's nostalgic memories.
4. Your Excellency, in line with the theme for the Anniversary, we highlight some
achievements as well as challenges faced in the execution of our mandate of
price stability.
5. The historical roles of central banks in most developing countries, including
Ghana, have been shaped by development strategies adopted over the period.
Bank of Ghana is no exception and the Bank's policies and activities have been
shaped by changing political and economic conditions over the years. In the
foundational years, the Bank of Ghana Ordinance (No. 34) of 1957 clearly
defined the role of the Bank to suit the prevailing circumstances which
characterized optimism and aspirations associated with the country's attainment
of independence. Consequently, the Bank of Ghana pursued proactive policies to
foster the credit system, creating financial institutions as growth-promoting
vehicles, while exercising the fundamental responsibilities of currency
management and acting as the Government's banker. Since then, the Bank has
epitomized and embraced new thinking on monetary policy formulation, driven
by those privileged to serve the Bank at the highest level-some of whom are
with us here now.
6. Ladies and Gentlemen, it has been sixty years and the Bank is now operating in
a different statutory and macroeconomic context. To respond to changing
domestic conditions and developments in central banking and monetary policy
globally, the Bank of Ghana Act 2002, Act 612, which was passed to bestow
operational independence on the central bank, was amended in 2016 to further
reinforce and re-focus its policies and mandate on price and financial stability.
These two pieces of legislation marked a paradigm shift in the Bank's operations
and would continue to define the role of the Bank of Ghana going forward.
7. On monetary policy formulation and implementation, the Bank officially adopted
inflation targeting framework a decade ago, with the Monetary Policy Rate as the
main policy tool. Over the past decade, the framework has helped lower inflation
volatility. Prior to the implementation of the framework, inflation was highly
volatile and hovered above 40 percent, but has since declined significantly and
edging closer to the medium-term target of 8±2 percent. The IT framework
introduced some clarity and transparency into the monetary policy formulation
and helped anchor inflation expectations.
8. This aside, Ghana is a small open economy and hence vulnerable to adverse
developments in the global economy, especially in the international commodity
markets. These vulnerabilities transmit to the domestic economy through the
trade and financial sectors, posing major challenges to the macroeconomic
fundamentals. For instance, the past decade has witnessed significant turmoil in
the global economy with rippling effects on international commodity and financial
markets. Because of the openness of the Ghanaian economy, such global shocks
ultimately pose challenges to macroeconomic stability, which is a necessary
condition for growth. Such events present immense challenges to monetary
policy formulation and the Bank's mandate of price stability.
9. Ladies and Gentlemen, the financial sector has also witnessed significant
transformation over the years. From a few government-owned banks, the
banking sector is now characterized by privately-owned banks with diverse
countries of origin. The sector continues to record asset growth and remains
liquid, although some financial soundness indicators have weakened in recent
times, raising concerns for financial stability. For instance, the prevalence of high
non-performing loans reduces liquidity which impacts negatively on profitability,
and broadly obstructs transmission mechanism of monetary policy.
10. Mr. Chairman, as part of our mandate to maintain financial stability, the
Bank has embarked on a process to resolve some of the prevailing issues which
threatens stability of the banking sector. Just this week, the Bank of Ghana revoked
the licenses of 2 banks and approved a purchase and assumption agreement that
allowed GCB Bank Ltd to take over the affected banks' selected assets and deposits.
This, together with other prudential and supervisory measures introduced by the
Bank of Ghana, is geared toward safeguarding the stability of the financial system
and creating a healthy financial sector capable of supporting the transformational
agenda of the Government.
11. Mr. Chairman, a decade ago, the Bank launched a comprehensive
programme to revamp the payment and settlement systems which is deemed
critical for the transmission of monetary policy. The Ghana Interbank Payment
and Settlement Systems Limited (GhIPSS) was then established to implement
and manage the payment system infrastructures for banks and non-bank
financial institutions in Ghana. Currently, GhIPSS manages the National Switch
and Biometric Smart Card Payment System (E-zwich), the Cheque Codeline
Clearing (CCC) and Automated Clearing House (GACH) systems. Today, our
payment system infrastructure is among the best in the sub-region and we are
gearing up to take it to the next level of interoperability which should unleash
more innovative products and services and promote financial inclusion in the
country.
12. Ladies and Gentlemen, we can go on enumerating the achievements, but
I would also like us to refocus our energies on the future of the Bank of Ghana.
13. Mr. Chairman, the uncertainty in the global economy suggests that the
Bank's mandate of price and financial stability should be anchored on new
strategies to strengthen monetary policy formulation to ensure macro stability
and a healthy financial system. The combination of which would unleash the full
potential of the private sector to boost economic growth.
As per the amended Bank of Ghana Act, 2016 (Act 918), the operational
independence is still guaranteed and the central bank will continue to employ all
tools available to achieve the mandate of price stability.
14. In our quest to maintain sanity in the financial industry, the Bank of
Ghana will continue to strengthen the licensing requirements, regulatory and
supervisory frameworks of banks and non-bank financial institutions. Together
with other relevant stakeholders, we will work to build a stronger industry in a
business-friendly environment by ensuring that banks have adequate capital to
match their risk appetite. The Bank is fully aware of its overall institutional
responsibility of developing an integrated financial system that can provide
diversified range of products and services to support a dynamic growing
economy. As we mark this 60th Anniversary, therefore, the Bank commits to
pursue this objective with professionalism and integrity, as we lay another
foundation for the next phase of central banking in Ghana.
15. In conclusion, Mr. Chairman, I should say that I consider it a privilege
and an honour to be part of this important milestone of the nation's central bank.
And I welcome you all to take active part in the celebrations.
Thank you for your attention.