A leading banking consultant is pressing the Bank of Ghana (BoG) to create a dedicated Financial Stability Committee (FSC) with authority equal to the Monetary Policy Committee (MPC), warning that the country’s financial system remains dangerously exposed to shocks that inflation-targeting tools alone cannot prevent.
Dr. Richmond Atuahene, responding to a recent International Monetary Fund (IMF) technical assistance report on macroprudential policy, argues that Ghana has no formal standing body charged exclusively with identifying and neutralising threats to the financial system as a whole. He describes this gap as a structural vulnerability that policymakers can no longer afford to ignore.
“The Bank of Ghana must establish a Financial Stability Committee on the same status like Monetary Policy Committee, which is the decision-making body that usually establishes a set frequency of formal meetings, often quarterly or semi-annually, so as to foster a timely and focused engagement,” Dr. Atuahene stated.
The distinction between the two bodies matters. While the MPC sets interest rates to control inflation, the proposed FSC would focus entirely on what economists call systemic risk: the danger that a disruption in one part of the financial system, whether in credit markets, insurance, or payments, cascades into serious damage across the broader economy.
Dr. Atuahene points to the 2022/2023 Domestic Debt Exchange Program (DDEP) as the clearest recent illustration of that danger. Losses suffered by lenders during the debt restructuring caused many banks to sharply reduce lending to businesses and households, depressing economic activity at a moment when the country could least afford it. He maintains that authorities failed to conduct the necessary assessment of how that exercise would affect the entire financial ecosystem before it was launched.
The FSC, as Dr. Atuahene envisions it, would deploy specialised macroprudential tools designed to smooth out financial cycles rather than price cycles. Chief among these is the Countercyclical Capital Buffer (CCyB), a mechanism that compels banks to accumulate extra capital reserves during periods of strong credit growth so that those reserves are available to absorb losses when conditions deteriorate, preventing banks from cutting off lending precisely when businesses and households need credit most.
The committee would also address what Dr. Atuahene calls the “too big to fail” problem. Large institutions, he notes, require stricter capital requirements than smaller peers because their potential collapse could trigger a domino effect of bank runs and forced asset sales across the sector. He cites GCB Bank as an example of a Domestically Systemically Important Bank (D-SIB) that would fall within this oversight framework.
Beyond the technical machinery, Dr. Atuahene argues that the FSC would give Ghana a clearer public voice on financial health. Rather than embedding stability updates inside interest rate announcements, the committee would maintain a dedicated communications channel and public webpage, providing transparent and regular assessments of risks to the banking sector.
A dedicated financial stability unit, he notes, can be charged with analysing systemic risks, developing monitoring indicators suited to the Ghanaian market, and preparing policy proposals for macroprudential decision-makers, following models already in place in Germany, India, the Netherlands, the United Kingdom, and the United States.
The proposal, if adopted, would give the central bank what Dr. Atuahene calls a “second pillar”: one hand managing the cost of living through monetary policy, and the other permanently guarding the structural integrity of the banking sector.
