Banking Liquidity risk remains well-contained in banking industry – BoG

The Bank of Ghana (BoG) has indicated that liquidity risk in the banking sector remains manageable, contingent on the liquidity of Government of Ghana (GoG) bonds.

Stress tests suggest most banks can endure daily deposit withdrawals between 1.0% and 4.0% for up to 30 days if the GoG bonds market is liquid. However, if the market is illiquid, banks would struggle with withdrawals exceeding 1.0%.

Additionally, the banking sector appears resilient to interest rate risk, with projections showing a potential decline in the capital adequacy ratio (CAR) from 13.85% to 11.57% in response to a significant interest rate increase.

Meanwhile, exchange rate fluctuations have a minimal effect on banks' solvency, reflecting constraints on net open positions.