Analyst welcomes BoG’s move to gradually review Cash Reserve Ratio for commercial banks

Dr. Johnson Asiama, Governor of the Bank of Ghana, announced that the central bank will review the Cash Reserve Ratio (CRR) for commercial banks in a phased manner to prevent economic disruptions, a decision welcomed by economists including Dr. John Kwakye of the Institute of Economic Affairs.

Dr. Kwakye described the move as wise, noting that the current 3-tier regime is cumbersome, costly, and has failed to direct credit effectively to the private sector.

Speaking at a meeting with the Ghana Association of Banks, Dr. Asiama acknowledged the CRR's impact on banks and committed to cautious adjustments.

The review follows a March 2023 increase of the CRR from 12% to 14%, a change that many banks argue restricts financial intermediation and raises operational costs.