can also limit banks ’ lending capacity and / or interfere with policy transmission and therefore impair the effectiveness of monetary policy. although the banking sector ’ s npl ratio has declined from 23. 5 percent in april 2018 to 18. 9 percent in april 2019, the current ratio still remains very high. with such high npl levels, transmission mechanism of monetary policy to lending rates is weakened and financial intermediation to support economic activity is constrained. page | 3 • to make effective the transmission channel through the npl angle, the bank of ghana is engaging banks to improve their risk management frameworks while the loan loss write - off policy is on - going. we are also strengthening credit conditions through the collateral registry and the credit referencing bureaus. market development to ease transmission mechanism • the need to broaden the scope of government financing needs without crowding out the private sector through the development of a liquid bond market is critical to effectively help manage debt without repercussions on macroeconomic stability. an efficient and liquid bond market provides some scope for effective transmission mechanism for monetary policy. • with sound fiscal and monetary policies, improved regulatory environment and improved payments and settlement infrastructure, government has lengthened the yield curve to 15years on the domestic money market. • government re - profiling has supported the shift towards more medium - to - long term bonds to reduce re - financing risks, driving down interest rates at the short - end of the market and has helped correct the yield curve. external vulnerabilities • exchange rate movements are relatively important for a small open - economy with a flexible exchange rate mechanism, like ghana. exchange rate dynamics have significant effects on the ultimate goal of price stability and hence on monetary policy decisions. • the impact effects of external vulnerabilities on the domestic economy are channelled through three main sources – first, with a commodity - dependent export base, the economy is highly vulnerable to negative terms of trade shocks. second, the increased levels of outflows in the service and income accounts due to the dividends and profit repatriation by large multinational companies in the energy, mining and telecoms sectors pose significant risks to reserves and in the process constrains out ability to effectively deal with shocks. third, the increased nonpage | 4 resident participation in the domestic bond market has exposed the economy to vulnerabilities stemming from changes in sentiments of these investors. these sources of vulnerabilities, when they materialize, can distort external sector conditions

these guidelines is to engender public confidence in banking institutions and to ensure that the management and board of directors exhibit integrity and professionalism in the running of the banking institutions. banking institutions are prohibited from the extension of financing and credit facilities to related parties including its directors and staff as well as family members and interested corporations. such prohibitions are aimed at preventing misconduct and irregular practices in provision of finance whilst ensuring fair and equitable treatment to the public. these governance are universal in nature and therefore, islamic banking institutions would not be faced with any difficulty in adopting these values. secondly, the objective is to prevent conflict of interests and accord responsibility on the banking institutions to provide complete and accurate information. bank negara malaysia has undertaken a number of initiatives in promoting transparency and good banking practices in islamic banking institutions. to achieve these objectives, bank negara malaysia has adopted an all - encompassing approach which is focussed on strengthening the institutional capacity of the islamic banking institutions, broadening the range of financial products and services and deepening the islamic financial markets by intensifying research and development efforts as well as creating awareness in addition to strengthening the regulatory framework for islamic banking. one aspect that has been carried out by bank negara is the introduction of a structured framework in the determination of the rate of return for islamic banking operations. previously, there were various modes of framework in the disclosure of the rate of return used by the islamic banking institutions and it has, to a certain extent, made it difficult to assess the performance of the islamic banking industry. it also created distortions in the rate of return as the spreads can vary significantly among islamic banking institutions. the new framework addresses the issue of uniformity as banks are required to observe a single framework, thereby reducing the potential for distortions in the rate of return, and generating a more equitable distribution of income, as well as increasing the level of transparency. on the part of the regulator, it has provided us with better means of assessing the efficiency of islamic banking institutions as well as their profitability, prudent management and fairness. in a dual banking system as that operating in malaysia where conventional banks also provide islamic banking facilities, the regulator is accountable to instil confidence to the public of the existence of firewalls between the conventional and islamic funds. since the introduction of a dual banking system in malaysia and the inception of the islamic banking institutions participating in islamic banking scheme ( ibs banks ), bank negara malaysia has made it mandatory for the islamic banking