The Bank of Ghana is intensifying efforts to strengthen the legal and operational foundations of the country’s financial markets as policymakers seek to support liquidity growth, deepen the fixed-income market and reduce systemic risk through wider adoption of globally recognised repo and derivatives frameworks.

Speaking at a market training programme organised in collaboration with Frontclear on the Global Master Repurchase Agreement (GMRA) and International Swaps and Derivatives Association (ISDA) documentation, First Deputy Governor Dr Zakari Mumuni said the rapid evolution of Ghana’s financial markets must be matched by stronger legal certainty, risk management standards and institutional coordination.

“Volumes tell us how active the market is, and documentation, risk frameworks and legal certainty also tell us how safe this environment is,” he said. “Today, we gather to close the gap between market activity on one hand and market resilience on the other.”

The remarks signal the central bank’s continued push to modernise Ghana’s money and capital markets following reforms aimed at improving liquidity management and enhancing confidence in domestic fixed-income trading after the country’s debt restructuring period.

Dr Mumuni said Ghana’s expanding fixed-income market is attracting increasingly sophisticated instruments and market participants, making investment in market infrastructure and legal frameworks more critical.

“A well-functioning repo market is a critical pillar of every modern financial system,” he said, adding that repos support short-term funding, liquidity management and the efficient use of securities as collateral while strengthening monetary policy transmission.

He cautioned, however, that those benefits can only be realised when market participants fully understand operational risks, legal obligations and governing rules underpinning transactions.

The GMRA serves as the globally accepted legal framework governing repurchase agreements, or repos, which are widely used for secured short-term borrowing in fixed-income markets. ISDA documentation, meanwhile, provides the contractual architecture for over-the-counter derivatives and hedging transactions.

According to the central bank, broader adoption of the two frameworks is expected to improve legal enforceability, reduce counterparty risk and strengthen market confidence.

Dr Mumuni noted that GMRA documentation establishes clear counterparty rights and obligations while providing mechanisms for default management, margining and close-out netting. “ISDA, on the other hand, serves an equally foundational role for derivatives markets,” he said.

“It creates the contractual framework for hedging and risk management and addresses payment obligations, collateral arrangements, events of default and close-out netting.”

The Bank of Ghana has in recent years introduced repo market guidelines endorsing GMRA as the industry standard for repo transactions. The framework expanded eligible counterparties and securities while promoting title transfer and netting arrangements intended to reduce credit risk and improve market efficiency.

The legal environment surrounding repo transactions in Ghana also received a boost in August 2024 when the International Capital Market Association published a GMRA legal opinion covering the enforceability of GMRA netting provisions under Ghanaian law. Such opinions are regarded as important tools for helping financial institutions assess legal risks before entering transactions in a jurisdiction.

Analysts say the development could support broader participation in Ghana’s repo market, particularly among international counterparties seeking stronger legal assurances around collateral and settlement enforcement.

The central bank also used the workshop to stress the need for closer coordination between treasury, legal, risk and operational teams within financial institutions.

“We have deliberately structured this programme to bring together the treasury, risk and legal functions within your institutions,” Dr. Mumuni said. “These functions form a critical tripod, no leg of which can be weak without compromising the whole.”

He urged market participants to deepen engagement around collateral management, operational readiness, legal enforceability and counterparty risk management as the country works to align its financial market practices with international standards.

“The integrity of Ghana’s financial market cannot rest on informal conventions or ambiguous documentation,” he said. “It must rest on legally enforceable agreements, operationally sound processes and professionals who understand precisely what they have signed.”

The Bank said it would continue working with financial market stakeholders to strengthen infrastructure, deepen liquidity and adapt global standards to Ghana’s domestic market conditions.

The push comes as authorities seek to rebuild investor confidence, improve monetary policy effectiveness and support more efficient interbank liquidity management within the broader financial sector recovery process.