Banks to Hold Reserves in Original Deposit Currencies Starting June
Banks to Hold Reserves in Original Deposit Currencies Starting June
Effective June 5, 2025, commercial banks operating in Ghana will be required to maintain cash reserves in the same currency as the deposits they receive. This marks a significant shift in the Bank of Ghana’s (BoG) policy framework, as it revises the Dynamic Cash Reserve Ratio (CRR) to strengthen financial stability and improve the transmission of monetary policy.
Under the current system, banks have been mandated to hold all reserves in the domestic currency, regardless of the deposit currency. While this measure was aimed at tightening liquidity and managing inflation, it has drawn criticism from banks for limiting their ability to lend and increasing operational costs due to currency mismatches.
With the revised policy, reserves for foreign currency deposits must now be held in corresponding foreign currencies, while reserves for local cedi deposits will continue to be maintained in cedis. The BoG believes this change will reduce currency mismatches on bank balance sheets and help mitigate systemic risks, thereby supporting broader macroeconomic stability.
Announcing the change, Governor Dr. Johnson Asiama stated, “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 foreign currency reserves for foreign currency deposits, and domestic currency reserves for domestic currency deposits. This policy measure will become effective on June 5, 2025.”
The decision was part of outcomes from the Monetary Policy Committee’s (MPC) meeting in May 2025. The Committee also opted to maintain the benchmark policy rate at 28%, reflecting a cautious approach amid ongoing inflationary concerns despite recent improvements in exchange rate stability and macroeconomic performance.
“The latest forecast points to continued easing of inflationary pressures due to tight monetary policy, stable exchange rates, and ongoing fiscal consolidation,” Dr. Asiama said. He added that inflation is now expected to decline more rapidly, potentially reaching the medium-term target by the first quarter of 2026—earlier than previously anticipated—assuming no major economic shocks occur.
However, he cautioned that inflation remains elevated relative to target levels, warranting the continued tight policy stance. “Despite these positive developments, the committee observed that the current level of inflation remains high and will require maintaining the policy rate at 28.0%,” the Governor concluded.
