Banks to hold reserves in same currency as deposits

By: Rebecca Okine

Starting June 5, 2025, commercial banks in Ghana will be required to hold cash reserves in the same currency as their customer deposits, following a new directive from the Bank of Ghana (BoG) aimed at reducing currency mismatches and strengthening the stability of the financial sector.

This change forms part of a broader revision to the central bank’s Dynamic Cash Reserve Ratio (CRR) framework and represents a departure from the current system, where all reserves are held exclusively in Ghana cedis regardless of the currency in which deposits were made.

By aligning reserve requirements with the deposit currencies, the BoG aims to reduce foreign exchange risks on bank balance sheets, improve the effectiveness of monetary policy transmission, and promote overall macroeconomic stability.

“The CRR for all banks will now be maintained in their respective currencies. This means that foreign currency deposits must be backed by foreign currency reserves, and cedi deposits by cedi reserves,” said BoG Governor Dr. Johnson Asiama during the Monetary Policy Committee’s (MPC) May 2025 briefing.

While the policy seeks to safeguard the economy, some banks have expressed concerns about the operational and liquidity challenges it may bring. Critics argue that the previous one-size-fits-all reserve model, though imperfect, allowed for more flexibility in financial intermediation and helped mitigate forex exposure risks.

The announcement comes as the BoG balances its objectives of controlling inflation and maintaining financial sector resilience. At the same MPC meeting, the central bank held the benchmark policy rate steady at 28%, signaling a cautious approach amid ongoing inflationary pressures. With the implementation date approaching, industry watchers will closely monitor how banks adjust their reserve strategies and what effects the new rules may have on lending, interest rates, and foreign currency operations