Financial Stability Council says there are arrangements for financial sector regulators to temporarily reduce regulatory capital and liquidity requirements for firms that partake in the debt exchange programme.

The Council also reveals regulators will suspend any new rules that will have an adverse impact on liquidity or solvency.

“Each regulator will communicate more specific reliefs to its regulated firms/schemes in due course,” a statement by the Financial Stability Council said.

This is part of measures to help manage the potential impacts of the Debt Exchange Programme on the financial sector. The financial sector regulators are expected to deploy all regulatory and supervisory tools to mitigate risks to financial stability. It will also assess impacts on a regular basis, and quickly address evolving risks in order to safeguard financial stability.

Accounting Treatment

Regulators, according to the Council, are already in discussions with external auditors of financial institutions and will provide guidance to ensure a standardized approach to the accounting treatment applied to the Debt Exchange.

Ghana Financial Stability Fund (GFSF)

Meanwhile, a Financial Stability Fund is being established with a target size of GHC 15 billion to be provided by the Government of Ghana and its development partners.

The Fund will provide liquidity to financial institutions that participate fully in the Debt Exchange.

“All financial institutions (banks, SDIs, pension schemes, collective investment schemes, fund managers, broker/dealers, insurance firms) that fully participate in the Debt Exchange can access the GFSF for augmented liquidity support, with effect from the date of completion of the Debt Exchange.”

The Fund will be managed by the Bank of Ghana under unique operational guidelines being developed by the Financial Stability Council. The Financial Stability Council will provide ongoing advice and oversight for the use of the GFSF.

The Government of Ghana this week launched Ghana’s Domestic Debt Exchange programme, an invitation for the voluntary exchange of approximately GHS137 billion of the domestic notes and bonds including E.S.L.A. and Daakye bonds, for a package of new Bonds to be issued by the government.

The Exchange excludes Treasury Bills in totality, and notes and bonds held by individuals (natural persons).

The Financial Stability Council has thus assured it will continue to closely monitor the impacts of the Debt Exchange on financial institutions and on the financial system as a whole, as well as the effectiveness of the measures outlined above.

These measures will be reviewed continuously and recalibrated as needed to ensure maximum effectiveness to safeguard the stability of the financial system and the protection of deposits, pensions, policy holders’ funds, and investor funds/assets.

Source: Ghana/ Fm