Economic and Investment analyst, Kofi Arkaah is asking the Bank of Ghana to introduce a law to cap how much commercial banks can invest in government securities.<\/p>\n
This follows reports of a number of banks who are currently investing heavily in government treasury bills, notes and bonds because of the high returns offered.<\/p>\n
The Ghana Commercial Bank (GCB), for instance had about 50% of its total assets in government securities as at the end of last year.<\/p>\n
This phenomenon is blamed by analysts on the low level of capital available to the private sector for growth.<\/p>\n
The 91-day Treasury bill is currently at 25.0104% and 182-day at 26.2519%.<\/p>\n
Analysts have also predicted it could go as high as 30 percent by next year.<\/p>\n
Kofi Arkaah told Citi Business News,<\/strong> this could significantly impede the growth of the private sector and the economy.<\/p>\n According to him \u201cBank of Ghana should implement a new regulation or policy which will cap the percentage of government\u2019s assets they (banks) can hold on their balance sheet.\u201d<\/p>\n \u201cWe can look at the numbers and do some modelling to figure out what the appropriate cap should be\u201d, he said.<\/p>\n He stated that\u00a0 if this is done, there will be more capital available to the private sector.<\/p>\n \u201cThere, the banks will take on more risk, because they need to make returns.\u201d<\/p>\n However Senior Economist at the institute of Economic Affairs, Dr John Kwakye disagrees.<\/p>\n According to him, having the cap on how much commercial banks can invest will bring too many controls into the banking system.<\/p>\n \u201cThe limit should rather be put on the budget\u201d, he said.<\/p>\n \u201cIt should be placed on the budget deficit. You don\u2019t blame banks for lending to government, it is a commercial (venture). You will be putting too many controls in the system. Let\u2019s operate the market as it is\u201d, he emphasized.<\/p>\n Dr kwakye indicated that the fact that banks do not want to lend to private sector or to agriculture or to small scale enterprises \u201cis a market failure\u201d<\/p>\n \u201cThat doesn\u2019t mean you should abolish the market. Government must recognize pockets of market failure,\u201d he added.<\/p>\n <\/p>\n By: Kwaku Anim Boadu\/citifmonline.com\/Ghana<\/p>\n","protected":false},"excerpt":{"rendered":" Economic and Investment analyst, Kofi Arkaah is asking the Bank of Ghana to introduce a law to cap how much commercial banks can invest in government securities. This follows reports of a number of banks who are currently investing heavily in government treasury bills, notes and bonds because of the high returns offered. The Ghana […]<\/p>\n","protected":false},"author":5,"featured_media":29158,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jnews-multi-image_gallery":[],"jnews_single_post":[],"jnews_primary_category":[],"jnews_social_meta":[],"jnews_override_counter":[],"footnotes":""},"categories":[19],"tags":[38,4],"class_list":["post-37322","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-health","tag-palaver-newspaper","tag-st-augustines-college"],"_links":{"self":[{"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/posts\/37322","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=37322"}],"version-history":[{"count":0,"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/posts\/37322\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/media\/29158"}],"wp:attachment":[{"href":"https:\/\/citifmonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=37322"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=37322"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=37322"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}