paul a acquah : enhancing confidence in the ghanaian financial system in the midst of the financial crisis keynote address by dr paul a acquah, governor of the bank of ghana, at the ghana banking awards gala night, accra, 9 may 2009. * * * mr. chairman, honorable ministers of state, executives of corporate initiative ghana, directors and executive of banks and industry, distinguished guests, ladies and gentlemen, thank you for the opportunity to join you at this year ’ s ghana banking awards gala night, the eighth in the series held under the auspices of corporate initiative ghana. first of all, let me take this opportunity to commend corporate initiative ghana for their foresight in institutionalizing this programme to offer a platform where consumers of banking services give public recognition to banks that they have adjudged to have excelled in various areas of their businesses over the year. i believe the annual awards in the various categories help to promote a competitive spirit, financial innovation, diversity of products and services, and efficiency in providing services to customers, and fostering confidence in the banking sector. today ’ s event is organized around the theme “ enhancing confidence in the ghanaian financial system in the midst of global financial crisis ”. [ my reading is that the captains of industry do not seem to be having sleepless nights like their counterparts who have become the targets of some public outrage and visible scapegoats for the crisis in the industrialised countries ]. this topic is very appropriate for this occasion. it offers the opportunity to draw lessons from this extra - ordinary global financial crisis and globally synchronized drop in economic activity and employment, and how it has spread in its severity across countries. we can look at it critically from our domestic perspective as we seek to anchor the financial sector as a pillar of growth in ghana ’ s economic development. mr. chairman, the hallmark of the current crisis is its unprecedented complexity both in terms of its causes and effects. what ostensibly started as a sub - prime mortgage loan problem in the united states has transformed into a multi - faceted financial and economic turmoil. it has shaken the foundations of the financial architecture, the credit and equity markets, and the framework of financial regulations, asset valuations, and transfer of risks. and, the practical consequences have meant a loss of confidence and trust in the financial system on a scale that threatens financial stability. financial institutions have weakened under the weight of the write - offs of toxic assets and corporate and consumer credit losses. banking failures have been

to the global financial crisis is mainly by way of banks ’ exposure to counterparties in the form of nostro balances and placements of funds with some correspondent banks abroad. stress analysis suggests that only a significant default or recall of borrowings in excess of 50 percent by counterparties could pose material threat to their risk - adjusted capital. moreover, stringent stress tests confirm that the industry as a whole is quite robust to exogenous macroeconomic shocks given the current level of capital adequacy of banks. mr. chairman, over the past year, a number of measures were introduced that should reenforce the ability of banks in ghana to withstand shocks and protect the soundness of the financial system. first, was the increase in the minimum capital of banks from gh¢7. 0 million to gh¢60. 0 million after due consultation with the banking industry. some banks have already begun the capitalisation process. second, the regulatory and supervisory framework was strengthened with the passage of the borrowers and lenders act, 2008 ( act 773 ), the non - bank financial institution act, 2008 ( act 774 ), home mortgage finance act, 2008 ( act 770 ), and the anti - money laundering act, 2008 ( act 749 ). third, in recognition of the growing role of ict in financial services delivery, the bank published guidelines on branchless banking in august 2008, to allow collaboration between banks, telecom companies and merchants to provide greater access to banking and financial services for the banked, unbanked and under - banked segments of the society. fourth, a common electronic platform ( the e - zwich ) was established in a further development of the payment and settlement system making it possible to link all banking institutions with a biometric smartcard as a vehicle for financial inclusion of all segments of the population. this should help deposit - based financial intermediation. further, in line with international regulatory standards, the bank of ghana collaborated with the ghana institute of chartered accountants to push for implementation of ifrs ( international financial reporting standards ) starting with the 2008 accounts. this has brought about greater transparency and comparability of reported financial results. all banks have complied broadly with the directive and reported in line with ifrs. mr. chairman, i cannot over emphasize that a stable and vibrant financial system is a prerequisite for economic growth and expansion. i believe that as stakeholders, we can in our diverse ways, play an immeasurable role in