BoG moves towards risk-sensitive regulation for banks

The Bank of Ghana Governor, Dr. Johnson Asiama, announced new regulations for banks. The central bank is moving towards risk-sensitive regulation and a system award model.

Dr. Asiama emphasized that this approach aims to create an agile and accountable banking system. He shared these insights during a meeting with Heads of Commercial Banks at the Bank Square.

This meeting is part of a strategy to engage bank leaders after each Monetary Policy Committee meeting. Attendees included chief executives and representatives from regulated banks, along with officials from the Bank of Ghana.

Key Focus Areas for Regulation

The first step in the new regulation will be risk identification and mitigation. This process will use data analytics and early warning indicators to spot emerging risks.

The 2024 Fraud Report showed a 5% increase in fraud cases. It also noted a 13% rise in the value at risk. Dr. Asiama stressed the need for stronger internal controls and oversight.

Digital resilience will also be a focus area for regulating banks. Dr. Asiama urged banks to take responsibility for their systems' safety and customer protection.

He stated that banks must invest in product security features and expand public financial education.

Another important area is governance and compliance. The Bank of Ghana will supervise board effectiveness, compliance culture, and accountability within institutions.

Dr. Asiama mentioned that compulsory Basel III & IV training for all bank directors is being considered to enhance regulatory knowledge.

Collaboration is another critical area for the Bank of Ghana's future plans. The Governor believes solutions should be co-created rather than just enforcing rules.

Additionally, building capacity for future challenges is essential, especially regarding credit risk and reputational exposure.