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Cedis Not In Short Supply - Declares BOG

THE Bank of Ghana has stated that there is no shortage of local currencies in the country.

It explained that the apparent shortage of the currency in some banks was as a result of huge withdrawals by their corporate customers to indulge in speculative purchase of foreign currencies.

Dr Kwabena Duffuor, Governor of the Bank of Ghana (BOG), said in an interview that the Central Bank has adequate local currencies to take care of the needs of all customers.

He said some banks have allowed their customers to withdraw billions over the counter, which, he said, was improper banking practice and must not be encouraged.

He said customers of banks who want to make huge payments to their clients can use bankers drafts if they do not want to issue cheques.

Dr Duffuor said the fast depreciation of the cedi against the dollar can also be attributed to the panic buying by some of these corporate companies.

The Governor further stated that over a seven-month period, some banks withdrew far in excess of what they have deposited with the Central Bank and said what is happening in some banks has no connection with any wrong fundamentals of the monetary and fiscal policies of the economy.

Dr Duffuor said he has accordingly advised that banks should only withdraw whatever they have deposited with the Central Bank and this seems to be creating problems for those banks that have overdrawn from the Central Bank.

Throwing more light on the issue, Mr Henry O. Ammah, Director, Issue Department of the BOG, said between January and July this year, one bank deposited ?11 billion but ended up withdrawing ?147 billion.

Giving the breakdown, Mr Ammah said the bank in April deposited ?738 million and withdrew ?28.5 billion, in May it deposited ?690 million and took away ?54 billion and in June no deposits were made but it withdrew ?17 billion.

He said this same bank deposited ?216 million and withdrew ?14 billion in July.

Mr Ammah said this means that some banks are depositing on behalf of other banks to enable them to withdraw without any effort to mobilise deposits.

He said another bank over the seven-month period, deposited ?50 billion but withdrew ?97 billion.

He said the BOG does not want to inject more money into the banking system as it would fuel inflation, adding that “banks should do what is right so as to create confidence in the banking system”.