and measures were directed at improving the regulatory framework and strengthening bank supervision to ensure increased efficiency and profitability of banks. a policy environment of volatile and generally high 1. inflation, large exchange rate swings, and negative real interest rates over extended periods resulted in an unsustainable portfolio of non - performing assets on the books of many commercial banks that had to be cleaned out. 2. heavy domestic borrowing by government to finance deficits and a growing domestic debt burden crowded out private sector finance. faced with an ample supply of relatively low - risk, high return government paper, banks and other financial institutions have had little incentive to engage in – or develop the capacity for – lending and equity finance for the private sector. the debt - interest rate and price dynamics of the past has fostered a short - term perspective among both savers and lending institutions. and one consequence has been very limited access by small and medium - sized enterprises to credit. 3. mr. chairman, in the current regime of macroeconomic stability, banks are in a position to efficiently play their primary role as financial intermediaries in the economic growth process, channeling funds from savers to borrowers for investment. today, macroeconomic stability is being increasingly taken for granted and it is no wonder therefore that the focus of the debate in recent times has shifted to how to accelerate growth and create employment. at the centre of that debate is a critical role for banks and other financial intermediaries, and the need for a vibrant domestic capital market. 4. effective intermediation requires that banks mobilize all available financial resources and deploy them in income - generating economic activities. banks must expand credit to the productive private sector to support international trade, including sub - regional trade. although there has been some increase in real credit in the last few years, small and medium - scale enterprises still have considerable difficulty accessing credit. 5. mr. chairman, since the theme of this award ceremony is efficiency and competitiveness in the banking industry, let me now turn my attention to initiatives that we have pursued in that regard. some of these initiatives include the movement to universal banking, the adoption of an open licensing system, and the modernization of the payments system, including establishing a central securities depository and the passage of supportive laws. 6. universal banking, which involves the removal of restrictions on banking activity, was introduced to allow banks to choose the type of banking services they would like to offer in line with their capital, risk appetite and business orientation

paul a acquah : evaluating the banking system in ghana keynote address by dr paul a acquah, governor of the bank of ghana, at the fifth banking awards ceremony, accra, 6 may 2006. * * * mr. chairman, honourable ministers of state, executives of corporate initiative ghana, captains of industry, distinguished guests, ladies and gentlemen, 1. thank you very much for the invitation to be the guest of honour and keynote speaker for this edition of the ghana banking awards event. my understanding is that this is the fifth in the series of banking awards and judging by the array of personalities assembled, it would be right to say that this event has come of age and would remain an expected event on the annual corporate calendar. 2. mr. chairman, today ’ s event is truly important and very much welcome. first of all it is purely a private sector initiative, largely driven by consumers of the products and services of the banking industry, and designed not only to recognize excellent banking service delivery but also to foster competition among banking service providers. secondly, i know that this event has over the years urged banks on to invest in their capacity to deliver superior services either to keep their leadership position ( s ) or to attain such leadership in the various areas. thirdly, the event can be seen as a forum where market participants, the consumers of banking services, cast their votes openly with regard to their perceptions and assessments of the quality of the services they receive from individual component banks that constitute the financial system. this type of consumer assessment is of special interest also to the central bank, as the regulator responsible for maintaining the stability and soundness of the industry, and confidence in the financial system as a whole. 3. the public has a legitimate and fundamental interest in an efficient, sound, liquid and wellfunctioning banking system, that is well - regulated within a stable macroeconomic environment. a banking system that is effective in mobilizing resources and channeling them into productive investments and in support of growth. 4. mr. chairman, as with most developing countries that have pursued economic and structural reforms, ghana has been undergoing a process of financial sector restructuring and transformation as an integral part of a comprehensive strategy for some time. it is fair to say that we have moved from the history of severe distress and dysfunction in the banking system, illiquidity and insolvency, interest rate controls and credit rationing to a market - based regime. as part of the process, policies