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":[],"categories":[19],"tags":[38,4],"yoast_head":"\n