## tarea2026024 ## Source details **Canonical URL:** [tarea2026024](https://www.imf.org/-/media/files/publications/tar/2026/english/tarea2026024.pdf) ## Other formats - [Markdown version](/-/media/files/publications/tar/2026/english/tarea2026024.pdf.md) - [Structured JSON version](/-/media/files/publications/tar/2026/english/tarea2026024.pdf.json) --- ### Preface and mission overview - Mission from the Monetary and Capital Markets (MCM) Department visited Accra, Ghana, from November 3 to 14, 2025, at the request of the Bank of Ghana (BoG) to support strengthening the central bank’s macroprudential policy framework and toolkit. - Intensive virtual engagements preceded the in-person meetings. - Key counterparts met included: Governor Dr. Johnson Pandit Asiama; Director of the Financial Stability Department (FSD) Dr. Kwasi Osei-Yeboah; Deputy Director of FSD Dr. John Kwame Dadzie; Directors of BSD, OFISD, Research, Resolution and Restructuring, Payment Systems; Head of the Fintech and Innovation Office; Chairperson of the Technical Committee of the Financial Stability Council (FSC); staff from the above departments; representatives from the National Insurance Commission (NIC) and the National Pensions Regulatory Authority (NPRA); senior management of Ecobank Ghana and GCB Bank. - Special thanks to: Gershon Kojo P. Incoom; Eugenia Otchere; Dr. John Kwame Dadzie. ### Executive summary — scope and main guidance - Scope: - Comprehensive review of BoG’s macroprudential policy framework and toolkit. - Assessed institutional framework, evaluated instruments, and provided guidance on implementing a countercyclical capital buffer (CCyB) and domestic systemically important bank (D-SIB) buffer. - Delivered seminars and workshops for capacity building and operationalization. - High-level recommendations: - Strengthen BoG’s macroprudential mandate and specify functions linked to financial stability. - Establish a dedicated decision-making body (e.g., financial stability committee) and an interdepartmental technical committee. - Maintain FSD responsibility for systemic risk assessment and macroprudential policy formulation, with enhanced staffing and expertise. - Adopt and publish a macroprudential strategy document and regular macroprudential policymaking process. - Create distinct communications channels for macroprudential policy, separate from MPC communications. - Enhance systemic risk monitoring with richer data (broad and sectoral credit, real estate, credit register) and more forward-looking assessments. - Develop transparent frameworks for CCyB and D-SIB buffers; consider a positive neutral (PN) CCyB; build releasable buffers and full liquidity requirements; consider calibrated capital measures for sovereign risk mitigation. - Implementation note: - Successful implementation requires sustained commitment and continued collaboration within BoG and among regulatory agencies. ### Key findings and system metrics - Financial system structure: - As of end-2024, banking sector assets accounted for over three-quarters of total financial sector assets. - Pensions: 16 percent of total financial sector assets. - Securities and insurance: about 4 percent each. - More than 90 percent of banking assets were held by universal banks. - Of the 23 universal banks, the nine domestic banks held almost 40 percent of assets. - The 14 foreign banks operate as subsidiaries of pan-African and non-pan-African foreign banks. - Banking sector performance and risks: - Post-2022 Domestic Debt Exchange Program (DDEP), banks incurred significant losses on domestic government bond holdings. - Capital adequacy improved to about 18 percent of risk weighted assets (RWA) as of August 2025—close to pre-DDEP levels. - Private sector NPL ratio: 20.8 percent. - Banks remain highly exposed to domestic sovereign. - Private credit to GDP (narrow measure): around 10 percent. - Ownership and data points relevant to CCyB: - Share of foreign banks in total bank assets: 61.2 percent as of June 2025. - Basel credit-to-GDP methodology applied using an HP filter with lambda = 400,000. - Sample period for CCyB analysis: 2006: Q4–2025:Q2. ### Prudential framework status and buffer environment - Existing regulatory calibration: - Minimum risk-based capital adequacy ratio: 10 percent (CRD 71–73). - Countercyclical capital buffer (CCoB): 3 percent (CRD 74, 80–83), bringing the total to 13 percent. - Complementary leverage ratio: 6 percent (treated as “a macroprudential measure” (CRD 88–90)) — reduced to 4.5 percent just before the pandemic. - International benchmarks cited: 8 percent minimum capital ratio, 2.5 percent CCoB, 3 percent leverage ratio. - BoG has not fully implemented Basel III and Pillar 2, but regulatory requirements exceed the cited international benchmarks. - Buffer history and current settings: - CCoB reductions/releases timeline: - Reduced to 1.5 percent at the onset of the pandemic in 2020. - Restored to 3 percent in 2022. - Released in full (to 0 percent) during 2023 to alleviate solvency pressures from the DDEP, with restoration planned as of end-2025. - All legally incepted buffers under the CRD (CCyB, D-SIB, and CCoB) have been set to zero percent, with the CCoB expected to be restored to 3 percent in early 2026. - Liquidity and currency risk: - No formal prudential liquidity requirements currently; BoG is implementing an LCR framework. - CRR used for liquidity management; dynamic CRR inversely calibrated to LTD ratio. - October 2025 revision to FX positions: asymmetric range of -10 percent to 0 percent (effectively prohibiting long single-currency positions). - Borrower-based measures (BBMs): - Household loans: about 5 percent of banking assets. - Residential mortgages: less than 1 percent of banking assets. - No BBMs introduced yet; recommendation to prepare legal framework for future adoption. ### Institutional, governance, and communications recommendations - Mandate and legal powers: - Strengthen BoG’s macroprudential mandate by specifying functions that support the financial stability objective; consider amending the BoG Act to formally establish macroprudential policy functions (¶ 26). - Articulate intermediate objectives and explicitly define financial stability within the Act. - Decision-making and strategy: - Establish a dedicated decision-making body for macroprudential policy (e.g., financial stability committee) — Priority: High; Timeframe: MT (¶ 27). - Adopt and publish a macroprudential strategy document — Priority: High; Timeframe: MT (¶ 28). - Maintain FSD as focal unit for systemic risk assessment and policy formulation; ensure adequate staffing and expertise — Priority: High; Timeframe: ST/MT (¶ 29). - Establish an interdepartmental technical committee led by FSD to regularly assess systemic risks and propose measures — Priority: Medium; Timeframe: MT (¶ 30). - Formalize a regular macroprudential policymaking process anchored in periodic CCyB reviews — Priority: Medium; Timeframe: MT (¶ 31). - Communications: - Create distinct macroprudential communication channel separate from MPC communications; publish press releases and hold dedicated briefings. - Launch a dedicated webpage on financial stability and macroprudential policy with strategy, instruments, archive of decisions, and FSRs. - FSC to strengthen external communications with a dedicated webpage and timely press releases. - Strengthen FSRs with forward-looking assessments, transmission channels, and explicit discussion of macroprudential settings. ### Systemic risk monitoring, data, and analytics - Data enhancements recommended: - Broaden credit data coverage: bank, nonbank, and cross-border debt; sectoral credit by purpose; real estate price indices and transactions; loan-level statistics from credit and collateral registers. - Adjust credit and nominal GDP series for structural breaks and seasonality. - Link credit register data to corporate financial statements and household income data where feasible. - Create a simple integrated database of macroeconomic and financial sector indicators. - Analytical improvements: - Strengthen forward-looking assessments: short-term delinquency rates (30- and 60-days past due), NPLs by currency, NOPs by asset-liability maturity term, aggregate monthly loan-level statistics. - Continue and refine joint liquidity-solvency sensitivity analyses and stress tests. - Use composite indicators, BSSI, heatmaps, cobweb analysis, and support these with supervisory judgement. ### D-SIB framework: identification and HLA calibration - Framework design and operational guidance: - Tailored D-SIB methodology developed for Ghana’s data; indicators should reflect size, substitutability, complexity, and interconnectedness. - Cut-off score should distinguish systemic from non-systemic banks; supervisory judgement to guide borderline cases. - Introduce regular data collection and periodic assessments; disclose results to stakeholders and publish methodology. - Establish cooperation mechanisms linking D-SIB framework with supervision and resolution; strengthen cross-border coordination and supervisory colleges. - HLA calibration and bucketing (proposed rates): - Proposed HLA bucket rates: - 0.5 percent of RWA in terms of CET1 capital; - 1 percent of RWA in terms of CET1 capital; - 1.5 percent of RWA in terms of CET1 capital; - 2 percent of RWA in terms of CET1 capital. - Guidance: - Avoid setting HLA at zero for identified D-SIBs. - HLA should increase with systemic importance; consider initially reducing number of buckets to three. - Publish annual D-SIB scores, bucket allocations, and HLA rates; where supervisory judgement overrides threshold, publish rationale. ### CCyB framework: methodology, calibration, and operations - Objective and stages: - Adopt a CCyB methodology specifying activation, build-up, and release; raise buffer when systemic risks increase; reduce buffer as risks recede or crystallize (¶ 81). - Apply gradual decline when risks recede incrementally; enable swift release—potentially to zero—when risks abruptly crystallize. - Measures to capture private credit: - Private credit measure should include all credit to non-financial private entities across domestic and cross-border channels and lenders, including non-banks and syndicated loans. - Alternative indicators and robustness: - Recognized limitations of the Basel credit-to-GDP gap in Ghana: sensitivity to estimation choices, short sample length, GDP volatility, FX valuation effects, structural breaks. - Complementary indicators recommended: - Differenced relative credit (DRC); - Two-year change in the credit-to-GDP ratio; - Real credit growth. - Preliminary analysis: DRC and real credit growth provided earlier and stronger signals in historical episodes than the Basel credit-to-GDP gap. - Buffer guide and threshold mapping: - Use Basel formula linking credit indicator to CCyB rate with lower threshold (L) and upper threshold (H) defined as fixed percentiles of historical indicator distributions. - Example illustrative mapping for DRC: - CCyB increased when DRC between 2.5pps and 5pps; - Lower threshold L=2.5pps; upper threshold 5pps corresponds to CCyB 2.5 percent. - CCyB calibrated in steps of 0.25 percentage point or multiples thereof; CCyB typically in range 0 percent to 2.5 percent of RWA but can be set higher. - Decision inputs and supervisory judgement: - Combine credit indicators with supporting indicators and expert judgement: lending rates/spreads, lending standards, asset prices, profitability, resilience. - Use composite indicators and aggregation methods to reconcile conflicting signals; exercise discretion. - Release guidance: - Release decisions should rely on near-contemporaneous indicators of banking distress: asset quality, credit losses, banks’ loss coverage capacity. - Quantitative reference: consider credit and other losses of at least 0.25 percent RWA capital decline as systemic losses relevant for CCyB setting. - Prompt partial or full release may be necessary to avoid sharp credit contractions. - Implementation, analytics, and data management: - Integrate CCyB analytics into FSR and Macroprudential Risk Assessments. - Requirements: timely and accurate inputs, consolidated data, validation checks, data registry with metadata and identifiers. - Positive neutral (PN) CCyB: - Assess incorporating a PN CCyB to introduce a stable component enhancing policy space and reducing inaction bias; suitability depends on country circumstances. - Communication and reciprocity: - Publish foundational CCyB policy document; take decisions typically quarterly or semi-annual for Ghana in stable periods. - Publish: CCyB rate; relevant credit-to-GDP ratio and deviation; buffer guide; justification; application dates; any exceptional timing; indicative period before next increase. - Forward guidance: outline expected timeline for reaching CCyB levels when increased from zero. - Consider reciprocity arrangements with home supervisors for cross-border syndicated exposures; reciprocity is mandatory up to 2.5 percent RWA and voluntary above that per BCBS (2010). ### Borrower-Based Measures (BBMs), policy leakages, and microprudential foundations - BBMs readiness: - Prepare legal adoption of BBMs as household lending market develops — Priority: Low; Timeframe: LT (¶ 64). - Potential instruments: LTV ratios; DSTI and DTI ratios. - BBMs to serve first as guardrails during early market development and be recalibrated as data and market depth improve. - Policy leakages: - Three forms: cross-portfolio within banks (reallocation to less regulated assets), cross-sectoral to nonbanks, cross-border to foreign financial institutions. - Mitigation: coordination with other domestic regulators via FSC, broad application where feasible, and cooperation with foreign regulators including reciprocity arrangements. - Microprudential link: - Macroprudential effectiveness depends on a strong microprudential foundation; continue strengthening supervision and alignment with Basel Core Principles. ### Implementation sequencing and priorities (summary) - Institutional: - Establish decision body and publish macroprudential strategy (Priority: High; Timeframe: MT). - Resource FSD and set up interdepartmental technical committee (Priority: High/Medium; Timeframe: ST/MT). - Data and analytics: - Enhance credit, real estate, and loan-level data; build integrated databases (Priority: High; Timeframe: MT). - Integrate CCyB analytics into flagship reports and regular processes (Priority: Medium; Timeframe: MT). - Instruments: - Develop and operationalize CCyB and D-SIB frameworks; implement liquidity requirements (LCR/NSFR) and calibrated sovereign capital measures (Priority: Medium–High; Timeframe: MT). - Prepare legal framework for BBMs (Priority: Low; Timeframe: LT). - Communications and coordination: - Create dedicated macroprudential communications channels and strengthen FSC communications (Priority: High; Timeframe: MT). - Seek reciprocity arrangements with key home supervisors (Priority: Low; Timeframe: LT). *IMF Technical Assistance Report | Preface and Executive Summary (tarea2026024).* ### Preface____________________________________________________________________________5 ### Preface ### Preface (mission overview and engagements) - Mission from the Monetary and Capital Markets (MCM) Department visited Accra, Ghana, from November 3 to 14, 2025, at the request of the Bank of Ghana (BoG) to support strengthening the central bank’s macroprudential policy framework and toolkit. - Intensive virtual engagements preceded the in-person meetings. - Mission met with: - Dr. Johnson Pandit Asiama, Governor of the BoG - Dr. Kwasi Osei-Yeboah, Director of the Financial Stability Department (FSD) - Dr. John Kwame Dadzie, Deputy Director of FSD - Ismail Adam, Director of the Banking Supervision Department (BSD) - Desmond Agbogah, Director of the Other Financial Institutions Supervision Department (OFISD) - Dr. Philip Abradu-Otoo, Director of the Research Department - Elliot Adu Amoako, Director of the Resolution and Restructuring Department - Clarence Blay, Director of the Payment Systems Department - Elhanan Owureku Asare, Head of the Fintech and Innovation Office - Louis Kwame Amo, Chairperson of the Technical Committee (TC) of the Financial Stability Council (FSC) - Staff from the above-mentioned departments and the FSC TC - Representatives from the National Insurance Commission (NIC) and the National Pensions Regulatory Authority (NPRA) - Senior management of Ecobank Ghana and GCB Bank - Special thanks to: - Gershon Kojo P. Incoom, Head of the Macroprudential Office in FSD - Eugenia Otchere, Head of the Research Unit of the Macroprudential Office - Dr. John Kwame Dadzie, Deputy Director of FSD, for facilitating discussions - Mission appreciation: BoG staff collaboration, comprehensive questionnaire responses, informative presentations, productive discussions, and generous hospitality. ### Executive Summary (mission assessment and guidance) - Scope of TA: - Comprehensive review of BoG’s macroprudential policy framework and toolkit. - Assessed institutional framework for macroprudential oversight, evaluated existing macroprudential policy instruments, and provided guidance on implementing a countercyclical capital buffer (CCyB) and domestic systemically important bank (D-SIB) buffer. - Complemented by in-person seminars and workshops for capacity building and operationalization. - Legal and institutional observations: - BoG has broad legal powers to conduct macroprudential policy; one objective is to contribute to the promotion of financial stability. - BoG can issue directives to deposit-taking institutions under its supervision (basis for deploying certain macroprudential measures based on Basel III). - Financial Stability Council (FSC), chaired by the central bank Governor, can make recommendations to member institutions. - Recommendation: BoG’s macroprudential mandate over deposit-taking institutions could be further strengthened by specifying functions clearly linked to the implementation of its financial stability objective. - Institutional and governance recommendations: - Establish a dedicated decision-making process and adopt a macroprudential strategy. - Establish a dedicated decision-making body for macroprudential policy (e.g., a financial stability committee) and an interdepartmental technical committee to regularly assess systemic risks and propose measures. - Financial Stability Department (FSD) should maintain formal responsibility for systemic risk assessment and macroprudential policy formulation, supported by adequate staffing and specialized expertise. - Adopt and publish a macroprudential strategy document to guide policy conduct. - Establish a regular macroprudential policymaking process for systemic risk analysis and tool deployment. - Communications: - Establish a distinct channel for macroprudential policy announcements, separate from Monetary Policy Committee communications. - Options: dedicated webpage on financial stability and macroprudential policy; strengthen systemic risk and macroprudential disclosures in the Financial Stability Review (FSR) and other publications. - Enhance FSC communications via a dedicated webpage and timely press releases hosted on or linked from the BoG website. - Systemic risk monitoring and data: - Enhance framework with more forward-looking assessments. - Current analysis would benefit from richer data coverage, including broad and sectoral credit, and real estate data, and use of the credit register. - Identification of systemic risk should be forward-looking, considering existing vulnerabilities, potential shocks, transmission channels, and impact over a longer time horizon. - Macroprudential toolkit status and gaps: - Current tools: capital conservation buffer (CCoB), leverage ratio, cash reserve ratio (CRR), limits on foreign exchange (FX) positions. - Sectoral tools limited; CCyB and D-SIB buffer frameworks not yet established (buffers effectively set at zero). - Recommendation: once banking system recovers and private sector credit strengthens, build macroprudential capital buffers to absorb losses and maintain provision of financial services during adverse shocks. - Additional recommendations: develop transparent frameworks for D-SIB buffers and CCyB; introduce a carefully calibrated capital measure to mitigate sovereign risk; adopt a full set of liquidity requirements; ensure strong microprudential regulation and close coordination with other regulators to prevent policy leakages. - D-SIB framework guidance: - Tailored D-SIB tool developed for Ghana’s data. - Indicators and category weights should align with Ghana’s banking system structure; cut-off score should distinguish systemic from non-systemic banks, with guidance on supervisory judgment. - Calibration of Higher Loss Absorbency (HLA) requirements should be supported by a clear analytical framework and informed supervisory judgement. - Regular data collection for D-SIBs and periodic assessments of systemic importance, with results disclosed to stakeholders. - Establish cooperation mechanisms integrating D-SIB framework with supervision and resolution; enhance cross-border coordination via supervisory colleges and engagement with home authorities of foreign-owned D-SIBs. - CCyB framework guidance: - Detailed methodology and practical implementation guidance provided; tool tailored to Ghana’s macrofinancial indicators. - Recommend adopting a transparent methodology for activation, build-up and release of CCyB. - Consider broad measure of credit and alternative credit indicators to calibrate CCyB rate, with buffer size linked to a credit indicator through a buffer guide. - Integrate CCyB monitoring and analytics into BoG’s systemic risk assessments and flagship reports. - Assess need to incorporate a stable positive neutral component into CCyB framework. - Design a well-structured communication strategy to ensure transparency and predictability. - Consider reciprocity arrangements with key home supervisors to reduce leakages. - Implementation note: - Successful implementation requires sustained commitment and continued collaboration within BoG and among regulatory agencies to mitigate systemic risks, absorb future shocks, and promote a stable and resilient financial system. ### Key findings and metrics cited in the report - Financial system structure and banking sector: - As of end-2024, banking sector assets accounted for over three-quarters of total financial sector assets. - Pensions accounted for 16 percent of total financial sector assets. - Securities and insurance accounted for about 4 percent each. - More than 90 percent of banking assets were held by universal banks. - Of the 23 universal banks, the nine domestic banks held almost 40 percent of assets. - The 14 foreign banks operate as subsidiaries of pan-African and non-pan-African foreign banks. - Banking sector performance and risks: - Post-2022 Domestic Debt Exchange Program (DDEP), banks incurred significant losses on domestic government bond holdings. - Capital adequacy improved to about 18 percent of risk weighted assets (RWA) as of August 2025—close to pre-DDEP levels. - Private sector NPL ratio remains elevated at 20.8 percent. - Banks remain highly exposed to domestic sovereign. - Based on a narrow measure of credit, the private credit to GDP ratio has been at around 10 percent. ### Recommendations ### Summary of Key Recommendations (priority and timeframe) - Institutional Framework - Further strengthen BoG’s macroprudential mandate by specifying functions that support implementation of financial stability objective (¶ 26). — Priority: Medium; Timeframe: LT - Establish a dedicated decision-making body for macroprudential policy such as a financial stability committee (¶ 27). — Priority: High; Timeframe: MT - Adopt and publish a macroprudential strategy document to guide conduct of macroprudential policy (¶ 28). — Priority: High; Timeframe: MT - Maintain responsibility over systemic risk assessment and macroprudential policy formulation in FSD, ensuring adequate staffing and expertise (¶ 29). — Priority: High; Timeframe: ST/MT - Establish an interdepartmental technical committee led by FSD to regularly assess systemic risks and propose macroprudential measures (¶ 30). — Priority: Medium; Timeframe: MT - Establish a regular macroprudential policymaking process to ensure macroprudential policy remains in focus (¶ 31). — Priority: Medium; Timeframe: MT - Enhance communications on systemic risk and macroprudential policy (¶ 32-35). — Priority: High; Timeframe: MT - Systemic Risk Monitoring Framework - Enhance data for systemic risk analysis, including broad and sectoral credit and real estate data (¶ 55). — Priority: High; Timeframe: MT - Further strengthen systemic risk analysis with forward-looking assessments (¶ 56). — Priority: Medium; Timeframe: MT - Macroprudential Policy Measures - Define macroprudential policy measures and assign responsibility over their operation (¶ 57). — Priority: High; Timeframe: ST/MT - Once the banking system recovers, strengthen resilience by building macroprudential capital buffers (¶ 58). — Priority: Medium; Timeframe: MT - Develop and implement a transparent D-SIB framework, ensuring buffers proportionate to systemic importance (¶ 59). — Priority: Medium; Timeframe: MT - Develop and implement a transparent CCyB framework, ensuring BoG has releasable buffers to support credit in downturns (¶ 60). — Priority: Medium; Timeframe: MT - Consider legally adopting a releasable sectoral buffer to address potential sectoral systemic risks (¶ 61). — Priority: Low; Timeframe: MT - Implement a carefully calibrated capital measure to mitigate sovereign risk without triggering disorderly unwinding of sovereign exposures (¶ 62). — Priority: High; Timeframe: MT - Adopt a complete set of liquidity requirements aligned with international standards while reflecting Ghana’s specificities (¶ 63). — Priority: High; Timeframe: MT - Prepare for legal adoption of Borrower-Based Measures (BBMs) as household lending market develops (¶ 64). — Priority: Low; Timeframe: LT - Continue close coordination with other regulators to address potential macroprudential policy leakages (¶ 65). — Priority: Medium; Timeframe: MT - Technical Guidance on D-SIB Framework - Adopt and implement a D-SIB methodology based on mission technical guidance (¶ 70-73). — Priority: Medium; Timeframe: MT - Introduce regular data collection and enhance analysis of cross-sectional dimension of systemic risk (¶ 74). — Priority: Medium; Timeframe: ST - Establish regular assessment of systemic importance of Ghanaian banks and disclose results to stakeholders (¶ 75). — Priority: Medium; Timeframe: MT - Establish cooperation mechanisms integrating D-SIB framework with micro-prudential functions and relevant departments (¶ 76). — Priority: Medium; Timeframe: MT - Strengthen cross-border coordination with relevant home supervisory authorities of foreign-owned D-SIBs (¶ 77). — Priority: Low; Timeframe: LT - Technical Guidance on CCyB Framework - Adopt an analytical framework for activation, build-up and release of CCyB buffers (¶ 81-86). — Priority: Medium; Timeframe: MT - Integrate CCyB analytical framework into BoG’s systemic risk assessments and flagship reports (¶ 87). — Priority: Medium; Timeframe: MT - Assess need for a positive neutral component in CCyB framework (¶ 88). — Priority: Medium; Timeframe: MT - Design and implement a communication strategy to convey CCyB decisions and methodology to stakeholders (¶ 89). — Priority: Medium; Timeframe: MT - Consider establishing reciprocity arrangements with key home supervisors (¶ 90). — Priority: Low; Timeframe: LT - Timeframe definitions: - Short term: < 12 months - Medium term: 12 to 24 months - Longer term: 2 to 5 years *IMF Technical Assistance Report | Preface and Executive Summary (tarea2026024).* ### 7. Macroprudential policy is the use of primarily prudential tools to limit systemic risk. A central ### Macroprudential policy is the use of primarily prudential tools to limit systemic risk. ### Definition and objectives - Macroprudential policy aims to limit systemic risk—the risk of disruptions to the provision of financial services caused by impairment of all or parts of the financial system, which can lead to serious negative consequences for the economy. - By mitigating systemic risks, macroprudential policy aims to reduce the frequency and severity of financial crises, thereby contributing to financial stability (see IMF 2013, 2014a). ### Importance of a strong institutional framework - A strong institutional framework provides a foundation for macroprudential policy by ensuring: - willingness to act, derived from the legal mandate and enhanced by accountability; - ability to act, linked to powers to collect information and to deploy and enforce measures, supported by analytical capacity and resources; - cooperation arrangements across relevant institutions to enable a sector-wide view and address interconnectedness. - Transparent and credible communication is essential to maintain accountability and support effective implementation of tools. ### BoG legal foundation and macroprudential mandate - The BoG Act lists as one objective that the central bank "contribute to the promotion and maintenance of financial stability." - The BoG uses broad powers in the Act to implement prudential measures for the banking sector, including the leverage ratio and the CCoB under the Capital Requirements Directive (CRD). - An interagency consultative FSC, chaired by the Central Bank Governor, was established in December 2018. - The BoG has direct powers to issue directives to deposit-taking institutions under its supervision; the FSC can make non-binding recommendations. - The BoG has statutory independence and broad information collection powers, including the collection of statistical information necessary for monetary and credit policy formulation and the right to request information for research relating to money or banking. - While the BoG has broad legal powers, financial stability functions and related intermediate objectives are not explicitly specified in BoG official documents; macroprudential policy and systemic risk are not explicitly mentioned in the Act pertaining to central bank functions. - This gap could create a gray area and potential inaction bias, as costs of measures may be borne immediately while benefits accrue over the longer term. - Unilateral macroprudential policies by the BoG to combat systemic risk could be legally contested or politically scrutinized. ### Macroprudential decision-making process at the BoG - A formal macroprudential policy strategy is currently not in place; objectives do not appear well defined in institutional documents and publications, with limited coverage in FSRs or on BoG’s website. - Macroprudential policy decisions are embedded within the monetary policy process; some decisions are taken by the Monetary Policy Committee (MPC). - The MPC focuses primarily on monetary policy settings and objectives; staff from the FSD and the Research Department present financial stability reports at MPC’s bi-monthly meetings, but macroprudential decisions are taken only exceptionally. - The MPC is comprised of the Governor and two deputies, directors of Research and Financial Markets departments, as well as two monetary policy experts from outside the BoG—seven members in total. They typically meet every two months, with meeting dates announced at the beginning of each year, but there may be some extraordinary meetings with irregular frequency. - Macroprudential tools are not clearly defined in institutional documents; the MPC’s monetary policy framework notes the possible use of additional measures “such as moral suasion and macroprudential measures.” ### Macroprudential work organization within the BoG - The Financial Stability Department (FSD) is responsible for macroprudential assessment and policy formulation. - FSD scope includes macroprudential policy, financial integrity, credit reporting and financial literacy, market conduct and consumer protection. - The macroprudential office comprises staff covering: 1) research (contributing to FSR), 2) surveillance (risk monitoring, analytical modeling, stress testing), and 3) secretariat (coordinating and supporting the FSC and international engagement). - There is scope for more resources in the macroprudential office to further develop and operationalize the framework. - FSD collaborates closely with other BoG departments: - Banking Supervision Department (BSD) provides micro-prudential regulatory and supervisory perspective and supervisory data. - Other Financial Institutions Supervision Department (OFISD) provides data on other specialized deposit-taking institutions. - Fintech and Innovation Office, Payment Systems Department, and Research Department also contribute. - FSD, BSD and Research meet regularly to discuss systemic risk analysis prior to MPC meetings; however, there is no formalized interdepartmental technical committee on financial stability at the bank level. ### Coordination with other agencies (FSC) - The Financial Stability Council (FSC) serves dual legal purposes: interagency coordination for financial stability and advisor to the president on financial stability issues; its mandate is set out in an Executive Instrument and a Memorandum of Understanding (MoU). - FSC objectives: strengthening stability of the financial sector by coordinating regulation and supervision, evaluating and mitigating financial stability risks, and preparing for crises. - BoG plays a leading role in the FSC: chairmanship and secretariat functions. - Current terms of council members coincide with that of the president, which could affect operational continuity and policy consistency; this risk is mitigated by participation of institutional staff in technical committees whose membership typically extends beyond political cycles. - The FSC meets at least quarterly and has “comply or explain” recommendation powers; it can issue recommendations to any FSC member but members remain independent and act within their legal mandates without FSC approval. - Decisions are generally by consensus and only exceptionally by majority vote. - The council is authorized to request necessary information and data from member institutions and relevant government agencies. - The council’s internal work is coordinated by a technical committee and organized in three working groups: 1) coordination of regulation and supervision at the micro level; 2) evaluation and mitigation of financial stability risks at the macro level (macroprudential policy working group includes representatives from all member institutions, chair rotates annually; MoU allows use of macroprudential tools through specific regulations or enhanced supervision, but does not define instruments explicitly); 3) crisis preparedness. - Mission observation: a technical committee meeting was well-organized with a defined agenda, detailed analytical presentations including stress testing results, and clearly-articulated follow up plans. ### Communications - Transparent and credible communication is emphasized as essential for accountability and effective implementation of macroprudential policy. *IMF Technical Assistance Report (section on Macroprudential policy and institutional framework at the BoG).* ### 23. Decisions on macroprudential measures are currently communicated through several ### tarea2026024 - 23. Decisions on macroprudential measures are currently communicated through several ### Communication channels and current practice - Decisions on macroprudential measures are communicated through several channels, including MPC press briefings, BoG press releases, and supervisory notices. - Example: the initial release of the CCoB during the pandemic was announced as part of the MPC communication, alongside other policy measures such as changes to RRs and loan provisioning (MPC, March 2020). - The restoration of the CCoB was communicated through the March 2022 MPC Press Release, together with decisions to increase the policy rate. - Pandemic-related reduction in the leverage ratio was conveyed through press releases and supervisory notices. - There is currently no dedicated BoG webpage on financial stability, macroprudential policies, or for the FSC; the ‘Supervision & Regulation’ landing page primarily focuses on microprudential regulation and supervision without references to “macroprudential” or “systemic risk”. - The FSD page highlights consumer protection and credit reference bureau information but does not feature updates on macroprudential measures. - The FSC does not have a dedicated website; although the MoU envisages the publication of statements following each FSC meeting, only a limited number of press releases have been issued in recent years. ### Institutional arrangements and oversight - Under the December 28, 2018 presidential decree, the official name of the council is the Financial Stability Advisory Council. It is established by the president under executive powers vested by Article 58 of the Constitution. Advisory functions include: - advise the president on the coordination of actions; - identify and evaluate threats, vulnerabilities, and risks to financial sector stability; - advise the president on the design and implementation of measures to mitigate the identified risks; - ensure readiness of the president to deal with financial crisis. - The council may perform other functions assigned by the president. - There are seven representatives in the FSC Board: the governor and deputy governor (financial stability) of the BoG; the deputy minister of finance (financial sector); and heads of the NIC, SEC, NPRA, and Ghana Deposit Protection Corporation. - While the FSC is legally obliged to meet every quarter, the president, the chairperson (BoG Governor), and five other joint members of the council can request additional meetings. ### Coverage in publications - Financial stability and macroprudential issues are covered in the Monetary Policy Report (MPR), the FSR and the BoG Annual Report. - The BoG publishes the MPR bi-monthly, covering banking sector and macrofinancial developments (e.g., July 2025 and September 2025). - The FSR, issued annually under the FSC and led by the BoG, provides assessments of the banking sector and the non-bank financial sectors, including quantitative analyses such as banking sector stress testing. - Current discussions in these publications could be enhanced with forward-looking assessments of systemic risks, their transmission channels, and potential impact. ### Recommendations — mandate, governance, and strategy - Macroprudential Mandate and Legal Powers: - Strengthen the BoG’s macroprudential mandate by specifying functions that support its financial stability objective. - Amend the BoG Act to formally establish macroprudential policy as one of the central bank’s functions—systemic risk assessment, formulating macroprudential policy, and measure enforcement—directly tied to its financial stability objective. - Articulate intermediate objectives and explicitly define the financial stability objective within the Act. - More explicit macroprudential policy functions would enhance legitimacy, empower action when individual institutions appear sound, protect from undue legal or political scrutiny, reinforce accountability to the legislature, and prevent misuse of macroprudential tools for objectives other than financial stability. - Macroprudential Decision-Making Process: - Establish a dedicated decision-making body for macroprudential policy, such as a financial stability committee; membership should include senior management (notably the Governor and deputy governors) with partial overlap with MPC members to facilitate coordination. - Consider inclusion of independent external members with financial sector expertise. - Adopt and publish a macroprudential strategy document that, at a minimum, defines financial stability, systemic risk, and macroprudential policy; articulates intermediate objectives; lists available macroprudential tools; outlines the macroprudential process, decision-making framework, inter-agency coordination, and communication principles. Publication would enhance accountability, credibility, and predictability. - The committee could be either established by law with decision-making powers, or it could be an advisory committee providing recommendations to the ultimate decision-maker. ### Recommendations — organizational arrangements and process - Macroprudential Policy Work Organization at the BoG: - The FSD should maintain formal responsibility for systemic risk assessment and macroprudential policy formulation; the macroprudential office should continue risk monitoring and stress testing with an enhanced policy focus. - Ensure the macroprudential office is well-resourced, and attract and retain staff with expertise in macroeconomics, finance, prudential regulation and supervision, and quantitative analytics. - Establish an interdepartmental technical committee, led by the FSD, to regularly assess systemic risks and propose macroprudential measures to the decision-making body. Participation should involve FSD (lead), BSD, OFISD, and the Research Department, with contributions from other departments as needed. - Formalize a regular macroprudential policymaking process as a continuous cycle: systemic risk assessment, instrument selection and calibration, deployment and communication, ex post impact evaluation, and reassessment of financial system resilience. - Anchor the process in quarterly or semi-annual decisions on the CCyB, complemented by explicit reviews of other macroprudential instruments; FSD should lead this process involving the interdepartmental technical committee, the decision-making body, the communications department, and the BSD. ### Communications — channels, webpages, and publications - Establish a separate communication channel for macroprudential policy decision announcements—distinct from MPC communication—to maintain focus on macroprudential policy and systemic risk. - Publish separate press releases on macroprudential decisions and hold dedicated press briefings as needed for important policy changes. - Launch a dedicated webpage on financial stability and macroprudential policy containing: - the definition of macroprudential policy together with its strategy, objectives, decision-making structure, instruments and their settings; - an archive of macroprudential policy decision press releases and past FSRs; - other relevant information. - Consider leveraging modern communication channels such as social media and blogs to announce and explain decisions. - FSC should strengthen its communication with a dedicated webpage and timely issuance of press releases (either a separate website linked to the BoG’s website or a page on the BoG’s website) including information on the council’s mandate and work organization, decisions and recommendations, accompanied by archived press releases. - Strengthen FSR and other publications: - FSR should elaborate on identification of systemic risks, their likelihood, transmission channels, and potential impact on financial stability, and include more forward-looking analysis of vulnerabilities based on early-warning indicators. - FSR should have a dedicated discussion on macroprudential policy settings, their effectiveness, and potential for future deployment in connection with identified vulnerabilities. - Timely publication of FSRs and presentation in press conferences accompanied by infographics, blogs, social media posts, and podcasts could enhance accessibility and institutional credibility. ### Systemic risk monitoring and macroprudential toolkit - Macroprudential toolkits should build on a robust systemic risk monitoring framework with policy measures mapped to identified risks. - Systemic risk is multidimensional—can arise from broad-based credit booms, sectoral exposures, liquidity challenges related to maturity transformation and funding instability, or structural interconnectedness and too-big-to-fail externality. - Macroprudential measures should be mapped to well-defined systemic risks: - Capital measures: CCyB, D-SIB buffer, risk weights — to address solvency concerns. - Liquidity measures: Liquidity Coverage Ratio (LCR), Net Stable Funding Ratio (NSFR), Loan to Deposit Ratio (LTD) ratio limits, macroprudential RRs — to target liquidity and funding amplification including FX exposures. - BBMs: lending standards and quantitative limits such as LTV and debt-service-to-income (DSTI) ratios — typically applied on household lending to combat household indebtedness and housing booms. - Tool operation involves three decision points: activation, tightening, and relaxation—each underpinned by systemic risk analysis: - activation — to provide basic systemic resilience; - tightening — to increase resilience and counter cumulation of systemic vulnerabilities; - relaxation — to allow the financial system to absorb shocks without amplification. - Legal enactment of a comprehensive set of measures is generally advisable so tools can be readily deployed. ### Systemic risk framework at the BoG — data, indicators, and analysis - Data and indicators: - Access to data for systemic risk analysis is generally robust, but there is no dedicated data system for macroprudential purposes. - Supervisory data from the BSD and macroeconomic data from the Research Department form the foundation for systemic risk assessment. - The BoG maintains credit and collateral registers that support lending activities, but they are not yet used for systemic risk analysis. - Staff conduct regular surveys to assess lending conditions and gather banks’ perspectives on systemic risks. - Indicators predominantly focus on the banking sector with limited granularity across institutional sectors. - Broad-based risk assessment uses banking system indicators including solvency, profitability and efficiency, asset quality, and credit growth indicators. - Sectoral risk coverage is mostly limited to household and corporate NPLs and sectoral credit growth rates; differentiation among various types of household loans is lacking. - Monitoring of the real estate sector is limited due to absence of a comprehensive price index; BoG is collaborating with the Ghana Statistical Service and other FSC members to develop real estate indicators, including a price index. - Government sector risk is monitored mainly through banks’ exposures to Government of Ghana (GoG) bonds expressed as a share of total assets. - Liquidity and funding risk indicators center on liquid asset ratios relative to short-term liabilities, the LTD ratio, and the share of wholesale deposits. - FX risk assessment is primarily based on net open positions (NOPs), disaggregated by maturity bucket. - Systemic risk analysis: - The BoG employs composite indicators and tools including cobweb analysis, the Banking Sector Soundness Index (BSSI), and heatmaps. - Cobweb analysis draws on foreign and domestic macroeconomic indicators, banking system NPLs, sectoral credit growth, and net deposits. - BSSI and heatmap use financial soundness indicators covering capital adequacy, asset quality, earnings, liquidity ratios, and efficiency. - These tools reflect the current state of the banking sector but offer limited early-warning properties and may not fully capture underlying vulnerabilities. - The credit-to-GDP gap serves as the main indicator for monitoring excessive credit, covering deposit-taking institutions. - The BoG conducts loan concentration analysis based on granular loan-level data for top 50 borrowers and interconnectedness analysis. - The FSD conducts top-down sensitivity analyses and stress tests assessing resilience to sovereign, credit, liquidity, and market risks, including quarterly sensitivity analyses and annual macro stress tests; these are regularly featured in the FSR and discussions within the FSC. - FSD’s sovereign and credit stress testing results have informed macroprudential and prudential policy decisions during the DDEP. *IMF Technical Assistance Report | Excerpt from chapter/section provided in the source content* ### 45. Ghana’s prudential capital requirements are appropriately more conservative than ### 45. Ghana’s prudential capital requirements are appropriately more conservative than ### Prudential capital framework and calibration - Minimum risk-based capital adequacy ratio: 10 percent (CRD 71–73). - Countercyclical capital buffer (CCoB): 3 percent (CRD 74, 80–83), bringing the total to 13 percent. - Complementary leverage ratio: 6 percent (treated as “a macroprudential measure” (CRD 88–90)) — reduced to 4.5 percent just before the pandemic. - Comparison with international benchmarks: international standards prescribe an 8 percent minimum capital ratio, a 2.5 percent CCoB, and a 3 percent leverage ratio. - Status of Basel III and Pillar 2: BoG has not yet fully implemented the Basel III standards and Pillar 2 requirements, but regulatory requirements exceed the cited international benchmarks. ### CCoB activation history and assessment - CCoB reductions/releases: - Reduced to 1.5 percent at the onset of the pandemic in 2020. - Restored to 3 percent in 2022. - Released in full (to 0 percent) during 2023 to alleviate solvency pressures from the DDEP, with restoration planned as of end-2025. - Regulatory commentary: - Releasing the CCoB is not envisaged under the Basel framework (RBC30); the CCoB is meant to be conserved as the last line of defense before breaching the minimum. - A releasable buffer such as the CCyB would be better suited for release during system-wide stress. ### CCyB and D-SIB frameworks: legal status and operational gaps - CCyB: - Legally adopted under the CRD but inactive with a buffer rate of zero due to absence of an operational framework. - CRD definition: “a cyclical requirement for banks to build up a buffer of capital in good times” to mitigate “excessive aggregate credit growth”. - BoG monitors indicators (including credit-to-GDP gap, mostly negative) and conducts credit risk analysis, but lacks an established framework linking cyclical risk assessment to buffer calibration. - D-SIB: - Legally adopted D-SIB framework but not yet operationalized. - BoG may designate a bank as systemically important and require additional capital (Art. 86-87 CRD). - A draft FSD paper (2021) broadly based on Basel D-SIB principles using size, substitutability, complexity, and interconnectedness indicators. ### Sovereign exposures and absence of targeted capital measures - High concentration of government securities on bank balance sheets driven by relatively high returns and zero risk weights on domestic sovereign exposures and large fiscal financing needs. - No dedicated capital measures currently exist to address sovereign-bank nexus risks. - Large sovereign exposures pose systemic risks to solvency and liquidity and can restrain private sector credit—as evidenced by the DDEP. ### Current buffer status and implications - All legally incepted buffers under the CRD (CCyB, D-SIB, and CCoB) have been set to zero percent, with the CCoB expected to be restored to 3 percent in early 2026. - Consequence: minimum capital requirements are currently unprotected by regulatory buffers, leaving banks near thresholds vulnerable to breaches or defensive deleveraging in the event of losses. - Empirical evidence (advanced-country studies) indicates proximity to the CCoB amplified shock impacts during the pandemic: contraction in lending and increase in bank funding costs (Berrospide et al., 2021; Couaillier et al., 2022; Mathur et al., 2023; BCBS, 2021). ### Liquidity and currency risk measures - Prudential liquidity requirements: - No formal prudential liquidity requirements currently; BoG is implementing an LCR framework. - BoG has used the CRR to manage banking system liquidity for monetary policy; the dynamic CRR is inversely calibrated to the LTD ratio. - Simple liquidity ratios (liquid assets to total assets; liquid assets to short-term liabilities) used for monitoring only. - BoG staff are developing LCR requirement and liquidity risk management and monitoring tools in line with Basel standards; some banks already use LCR internally. - Currency risk management: - Managed primarily through Net Open Position (NOP) limits. - Previous aggregate NOP limit: 10 percent; single-currency limit: 5 percent. - October 2025 revision: asymmetric range of -10 percent to 0 percent, effectively prohibiting long single-currency positions. - No macroprudential tools specifically targeting currency-induced credit risks; BoG staff note most FX borrowers are naturally hedged. ### Borrower-based measures (BBMs) - No macroprudential BBMs introduced, justified by low share of household credit: - Household loans: about 5 percent of banking assets. - Residential mortgages: less than 1 percent of banking assets. - Expectation: as sector recovers and monetary policy rates normalize, banks likely to increase private sector lending, including households. ### Process for tool deployment - No regular macroprudential process yet established for deployment of tools. - BoG conducts financial system surveillance and risk monitoring for MPC and FSC meetings, but activities are not explicitly geared toward tool activation. - BoG assessed DDEP impact on banking resilience, which informed regulatory reliefs. ### Recommendations — Systemic risk monitoring - Enhance data for systemic risk analysis, with emphasis on: - Broad and sectoral credit and real estate. - Comprehensive credit indicator covering bank, nonbank, and cross-border debt. - Adjust credit and nominal GDP series for structural breaks and seasonality. - Credit portfolio data complemented with new lending info: volumes, interest rates, underwriting standards, disaggregated by sector. - Household loan classification by purpose: residential mortgages, uncollateralized housing, consumer, other credit. - Development of real estate sector data including price indices and transactions for residential and commercial markets. - Leverage loan-level data from credit and collateral registers; link to corporate financial statements and household income data if feasible. - Create a simple, integrated database of macroeconomic and financial sector indicators. - Strengthen forward-looking systemic risk analysis through: - Indicators: short-term delinquency rates (30- and 60-days past due), NPLs by currency, NOPs by asset-liability maturity term, aggregate monthly loan-level statistics from the credit register. - Sectoral credit analysis distinguishing commodity exporters and other borrowers. - Continued use and refinement of joint liquidity-solvency sensitivity analyses. - Once credit register is combined with income and financial accounts, develop framework to assess credit risk and borrower resilience to income, inflation, and interest rate shocks. ### Recommendations — Macroprudential policy measures - Clearly define macroprudential policy measures and assign operational responsibilities: - Classify a tool as macroprudential if its primary purpose is to contain systemic risk. - FSD to be responsible for tools requiring active adjustment and calibration (capital-based measures such as D-SIB, CCyB, and other releasable buffers; BBMs). - BSD to maintain enforcement responsibility. - Link macroprudential measures to intermediate objectives; maintain flexibility to incorporate new tools. - Strengthen resilience by building macroprudential capital buffers once banking system recovers: - Restore and conserve the CCoB through the cycle. - Implement and activate macroprudential buffers including D-SIB HLA requirements, CCyB, and others as needed. - Use a mix of usable buffers (CCoB, D-SIB) and releasable buffers (CCyB) to absorb losses and continue lending during systemic stress. - Introduce buffers once profitability is durable, solvency secure, and credit growth is no longer constrained by capital; phase-in after industry consultations. - Choose composition and size of buffers within overall capital stack to avoid hindering financial deepening or leaving insufficient buffers. - Consider broader structural policies to improve access to credit. - Develop and implement a transparent D-SIB framework: - Buffers proportionate to systemic importance; publish framework to strengthen credibility and reduce implementation costs. - Apply designation sparingly given low system concentration; designate an institution as systemic only if failure would significantly disrupt broader provision of financial services based on size, interconnectedness, complexity, and non-substitutability. - Complement D-SIB framework with releasable buffers and liquidity requirements. - Develop and implement a transparent CCyB framework to ensure releasable policy space: - Adopt a simple and transparent CCyB framework (details in Section IV of source). - Consider maintaining a long-term positive buffer rate, such as the positive neutral (PN) CCyB, given exposure to external shocks and challenges in identifying excessive credit growth. - PN CCyB allows early activation before cyclical risks emerge, tightening as vulnerabilities grow and releasing when risks materialize; enables gradual capital accumulation and policy space during downturns. - PN CCyB can be introduced even without a well-developed cyclical adjustment framework. - Consider legally adopting a releasable sectoral buffer for targeted sectoral systemic risks: - Sectoral buffer allows targeted intervention on affected exposures; relax when risks subside or materialize. - Potential applications: concentrations in large indebted corporates, sovereign exposures, or unhedged FX borrowers. - For risks confined to individual banks, use Pillar 2 measures. - Implement calibrated capital measures to mitigate sovereign risks without disorderly unwinding: - Avoid sweeping measures (broad-based risk-weight increases or ratings-based systems) that can cause cliff effects. - Prefer targeted, proportional, and phased measures: sectoral buffer applied to total RWA with nonlinear calibration, or Pillar 2 add-ons/risk-weight add-ons/buffers for concentrated sovereign exposures. - Success depends on fiscal sustainability and opportunities for sustainable private nonfinancial sector credit growth. - Adopt a complete set of liquidity requirements aligned with international standards while reflecting Ghana’s specificities: - Prioritize timely adoption of the LCR framework and complement with NSFR requirements; consider LTD limit as intermediate safeguard. - Tailor requirements to Ghana’s specifics, including relative illiquidity of government securities. - Differentiate LCR and NSFR requirements by currency to cover FX risks and maturity mismatches; complement with NOP limits. - Maintain sufficiently conservative liquidity regulations while allowing simplifications for practical implementation. *IMF Technical Assistance Report | 22–26* ### 64. The BoG should prepare for legal adoption of BBMs as household lending market develops. ### The BoG should prepare for legal adoption of BBMs as household lending market develops. ### Rationale for proactive legal framework - Household lending is currently described as "insignificant" but "is likely to grow as banks diversify away from sovereign exposures." - To "avoid a situation where vulnerabilities emerge faster than regulation," the BoG should "proactively establish a legal framework that enables timely deployment of BBMs." - Early legal preparedness aims to ensure BBMs can be "timely deployed" as the household credit market matures. ### Recommended BBM instruments and sequencing - Initial role: "the measures could serve as guardrails" during early market development. - Later role: "recalibrated and tightened as the sector expands and more granular household loan data becomes available." - Potential complementary measures to include once household credit market matures: - Equity-based measures — such as LTV ratio. - Income-based measures — such as DSTI and debt-to-income (DTI) ratios. - Intended objectives of these tools: - "help contain excessive credit and housing cycles," - "strengthen household resilience to shocks," - "support overall financial stability." ### Coordination to address macroprudential policy leakages - Continued close coordination with other regulators is recommended to address potential macroprudential policy leakages, which typically occur in three forms: - Cross-portfolio within banks: banks may "reallocate from more regulated to less regulated assets, such as sovereign debt or household mortgages—typically lower-risk and less capital-intensive with lower risk weights." While partly intended, this can "create new concentration risks," requiring readjustment of macroprudential settings. - Cross-sectoral to nonbanks: activities may shift "to less regulated institutions, such as nonbanks, which can lead to excessive borrowing by the nonfinancial sector." To mitigate this risk, "policy settings should be coordinated with other domestic regulators—such as through the FSC—and applied broadly." - Cross-border to foreign financial institutions: cross-border borrowing (for example by large corporates accessing foreign credit providers) is "more challenging and requires cooperation with foreign regulators, including reciprocity arrangements (IMF-FSB-BIS, 2016)." ### Need for a strong microprudential foundation - A "robust macroprudential policy framework should rest on a strong foundation of micro-prudential regulation and supervision." - Rationale: micro-prudential regulation and supervision focus on "the safety and soundness of individual institutions," while macroprudential policy "aims to contain broader systemic risk"; both need to "work together to ensure financial stability." - Effectiveness linkage: "while capital buffers can address certain systemic risks, their effectiveness depends on accurate assessment of risk weights by microprudential regulation." - Recommendation: "it is essential for the BoG to continue strengthening microprudential regulation and supervision and aligning them with international standards, including Basel Core Principles." *IMF Technical Assistance Report — Excerpt (paragraphs 64–66).* ### 81. The authorities should adopt a methodology for the activation, build-up and release of CCyB ### 81. The authorities should adopt a methodology for the activation, build-up and release of CCyB buffers, based on the guidance provided by the mission ### Objective and framework - Adopt a CCyB methodology that specifies how to determine the CCyB rate at each stage: raise the buffer when systemic risks increase, guided by credit cycle and complementary indicators and supervisory judgement; reduce the buffer as risks recede or crystallize. - Apply a gradual decline in the buffer when risks decline incrementally, and enable swift release—potentially to zero—when risks abruptly crystallize. ### Key data and context - The share of foreign banks in total bank assets was 61.2 percent as of June 2025. All fourteen foreign banks (out of total 23) operate as subsidiaries. - The Basel credit-to-GDP methodology applied in analysis uses an HP filter with lambda = 400,000. - The sample period covered 2006: Q4–2025:Q2. ### Measures to fully capture private credit - The measure of private credit should include all credit to non-financial private entities—regardless of form or lender—covering loans from domestic and foreign banks as well as non-banks, through both domestic and cross-border channels. - Current limitation: the BoG’s credit-to-GDP ratio reflects only universal bank lending to the private sector and excludes cross-border syndicated loans with limited domestic bank participation (notably loans to mining and cocoa firms). ### Alternative credit indicators for CCyB calibration - Limitations of the Basel credit-to-GDP gap in Ghana: sensitivity to estimation methods, short sample length, assumed cycle duration (lambda), high GDP volatility, FX valuation effects, and potential structural breaks. - Mission-proposed complementary indicators (require no model estimation and have been used elsewhere): - Differenced relative credit (DRC). - Two-year change in the credit-to-GDP ratio. - Real credit growth. - Preliminary analysis: these alternatives provide earlier and stronger signals of credit cycle dynamics in Ghana compared to the Basel credit-to-GDP gap. ### Buffer sizing and threshold approach - Follow the mission’s buffer guide applying the Basel formula to link a credit indicator to the CCyB rate: - CCyB remains at zero when the credit-to-GDP gap is below a lower threshold (L), rises linearly between thresholds, and reaches a maximum at an upper threshold (H). - In the mission’s guide, thresholds were set at fixed percentiles of historical distributions of key credit indicators: the lower threshold (L) enables early activation ahead of past distress periods; the upper threshold (H) caps the maximum historical value. - Indicator performance in historical episodes: - DRC and real credit growth provided robust early signals for activation during the post-GFC downturn (2009–10) and the mid-2010s banking crisis. - None of the credit indicators signaled vulnerabilities before the 2023 DDEP, which was unrelated to excessive credit. - Implication: maintain a transparent, flexible CCyB framework and recognize the limited role of credit indicators in detecting risks beyond the credit cycle. ### Decision-making inputs and supervisory judgement - CCyB decisions should combine credit indicators with supporting indicators and expert judgement. - Supporting indicators include: - Credit market metrics and macro-financial aggregates (lending rates and spreads, lending standards, asset prices and volatility). - Domestic and external macro indicators. - Profitability and resilience indicators, since profitable banks can hold voluntary buffers to absorb a CCyB increase. - Use composite indicators and aggregation methods to handle conflicting signals; exercise discretion informed by interpretation of indicators. - The mission provided sample codes and emphasised interpretation, discretion, and aggregation methods. ### Release of the CCyB - Release should reflect nature and magnitude of declining cyclical risks: - Prompt partial or full release is essential to prevent sharp credit contractions as systemic losses materialize. - Gradual relaxation may be appropriate when risks durably recede in a benign manner. - Decisions to release should rely primarily on indicators of bank losses and capital constraints—distinct from leading credit indicators—to ensure time-consistent application. ### Implementation and analytics - Integrate analytical aspects of the proposed CCyB framework into BoG analytics and flagship reports. - Embed the analytical layer progressively into key outputs such as the FSR and bi-monthly Macroprudential Risk Assessments. - Data management requirements: - Timely and accurate inputs, consolidation of relevant data from internal and external sources, validation checks for consistency and completeness. - Support by a data registry with clearly structured data linked through metadata and identifiers. ### Positive neutral (PN) CCyB consideration - Assess the need to incorporate a positive neutral component into the CCyB framework: - A PN CCyB introduces a stable component that can enhance policy space, simplify operations, reduce inaction bias, and provide a transparent structure for gradual buffer build-up and release. - Suitability depends on country circumstances; several authorities have recently adopted a PN CCyB approach. ### Communication and transparency - Develop a well-designed communication strategy to ensure transparency and predictability: - Clearly explain CCyB objectives, methodology, and decision-making process. - Assess and announce CCyB rates on a regular basis (quarterly or semi-annually). - Outline elements of assessments and decisions, consider overall capital requirements, and provide guidance on the CCyB buffer, including indicators relevant to cyclical systemic risk. - Be transparent about how buffer settings are determined to help banks incorporate expected CCyB paths in capital planning. ### Reciprocity arrangements - Consider reciprocity arrangements to ensure consistent coverage of credit exposures to Ghanaian borrowers—primarily relevant for cross-border syndicated loans otherwise outside BoG’s CCyB decisions. - Reciprocity means home authorities would apply the same (or a higher) CCyB rate to their banks’ exposures to Ghanaian counterparties once the BoG activates the CCyB. - Implementation requires BoG to promptly inform home authorities of banks with material exposures to Ghana. - Note: BCBS (2010) provides that reciprocity applies up to a CCyB rate of 2.5 percent of risk-weighted assets and becomes voluntary for any rate exceeding this threshold. *IMF Technical Assistance Report — excerpts from Section on CCyB methodology and operational recommendations.* ### 13. The toolkit includes indicative quantitative indicators to inform supervisory discretion. ### 13. The toolkit includes indicative quantitative indicators to inform supervisory discretion. ### Quantitative indicators and supervisory judgement - The toolkit enables evaluation of banks subject to supervisory judgment for D-SIB identification and HLA calibration using the integrated assessment available in the toolkit. - When supervisory judgement is applied, the BoG should provide and disclose a clear rationale. If a bank with a score below the threshold is designated as a D-SIB, the authorities should publish a brief statement explaining: - (a) which optional indicator(s) were used to inform the decision; - (b) why these indicators are relevant; - (c) why the bank is considered systemically important in relation to these indicator(s). - The ‘D-SIB Assessment’ tab in the toolkit enables evaluation of the framework’s sensitivity to different cut-off thresholds. ### HLA calibration principles and bucketing - HLA calibration is guided by several underlying principles: - First, setting the HLA rate at zero for banks identified as D-SIBs should generally be avoided. - Second, the HLA rate should increase with a bank’s systemic importance, although the relationship does not need to be strictly linear. - Third, the calibration should create incentives for banks not to increase their systemic importance. - Finally, applying a flat HLA rate is not appropriate when there are significant differences in systemic importance among banks. - The bucketing approach in the draft D-SIB framework is the most popular calibration method. Under this approach, banks are grouped into buckets based on their D-SIB scores, with each bucket assigned a different HLA requirement. - In the draft framework, banks are allocated to the two lowest of four pre-defined buckets, leaving the top two bucket(s) empty. - Supervisory judgment may be used to adjust the number or size of buckets if needed. ### Bucket rates and mapping - The proposed HLA rates for the four buckets are: - 0.5 percent of RWA in terms of CET1 capital; - 1 percent of RWA in terms of CET1 capital; - 1.5 percent of RWA in terms of CET1 capital; - 2 percent of RWA in terms of CET1 capital. - The proposed minimum HLA requirement 0.5 percent is consistent with international practice (Figure A4). - The gradient of HLA rates across buckets is relatively shallow, with equally sized steps of 0.5 percentage points above the assumed lowest bucket. - The BoG could consider reducing the number of buckets to three initially and adding a fourth only when the highest bucket becomes populated; the current number of buckets nonetheless preserves the incentive for banks not to increase their systemic importance. - The D-SIB scores can be mapped to HLA buckets using a simple linear function determined by: - the cut-off threshold for D-SIB identification (a lower bound); and - an upper threshold that separates banks into buckets according to systemic importance. - The toolkit provides a dedicated functionality for mapping D-SIB scores to HLA buckets (see also TA Report, Figure 3). - A clear and transparent mapping enhances consistency, comparability, and communication of HLA requirements over time. - Authorities may also use supporting indicators, similar to those applied in D-SIB identification, to inform bucket allocation. ### Disclosure of D-SIB Assessment and HLA rates - The D-SIB framework should provide for a regular, annual review and publication of results. - By a pre-determined date each year, the review should include the D-SIB scores, bucket allocations, and HLA rates for all designated entities. - Banks exceeding the published cut-off threshold would be automatically designated as D-SIBs, and the results disclosed. - Where a bank with a score below the threshold is designated as a D-SIB, the authorities should publish a brief statement explaining the reasoning (see E. Supervisory Judgement). - The D-SIB framework should also entail the publication of the methodology for setting buffer requirements. - If the threshold for identifying D-SIBs has been adjusted—either raised or lowered—the reasons for this amendment should be clearly stated. - The extent of disclosure should ultimately reflect the BoG’s judgement on balancing transparency with prudential considerations. *IMF Technical Assistance Report — excerpt (pages 41–43)* ### Annex II. The CCyB Methodology and Toolkit ### Annex II. The CCyB Methodology and Toolkit ### A. Introduction - Presents methodological guidance for implementation of the CCyB in Ghana, elaborating on the TA report on Ghana’s macroprudential framework and building upon BCBS (2010) guidance emphasizing the credit-to-GDP approach complemented by additional indicators and robust calibration. - Intended to be used in conjunction with an Excel-based CCyB toolkit. - The Excel-based CCyB toolkit: - Consolidates data inputs required for estimating the credit-to-GDP and calculating alternative credit indicators. - Organizes, visualizes, and benchmarks indicators relevant for CCyB activation, tightening, and release. - Compares indicators against their historical distributions and crisis benchmarks using percentile positions and visualization tools including heatmap risk categories, sparklines, and trend markers. - Supports calibration of thresholds and indicative CCyB rates. - Annex structure: objectives and legal/regulatory foundations; decision stages (activation/tightening, full/partial release); communication and disclosure requirements. ### B. Regulatory and Legal Foundations - CCyB definition and calibration: - The CCyB is a broad-based, time-varying CET1 buffer requirement set between 0 percent and 2.5 percent of RWA, but can be set higher when system-wide risks are judged to be high. - Calibrated in steps of 0.25 percentage point or multiples of 0.25 percentage point; cannot fall below zero. - Banks that do not meet the CCyB requirement are subject to restrictions on dividend distributions. - Reciprocity and leakage: - Framework features mandatory international reciprocity up to levels of 2.5 percent of risk-weighted assets for foreign entities. - Leakages to less regulated entities may be contained if the financial system is predominantly bank-based and/or regulation allows CCyB application to non-banks. - In Ghana, the Banks and Specialized Deposit-Taking Institutions Act and related provisions provide backstops to prevent leakages via BoG supervisory and regulatory remit. - Timing of changes: - Typically a 12-month lead time between announcement of an increase in the CCyB rate and its effective implementation by banks. - A reduction in the buffer can be made effective immediately; if BoG reduces the CCyB rate it shall also decide on an indicative period during which no increase in the buffer is expected. - Timely activation is critical to avoid procyclicality, as buffer building takes time (BCBS, 2010). ### C. Increasing CCyB - Overall approach: - Key element is assessment of build-up of cyclical risks over time, primarily based on the credit-to-GDP approach and complementary credit indicators per BCBS (2010). - Estimation of the credit-to-GDP gap is a typical starting point; complemented with supporting indicators to provide additional information on system-wide vulnerabilities. - Credit-to-GDP gap measurement: - Private credit definition should cover all sources of debt funds for the private sector, including funds raised abroad, capturing credit by domestic and foreign banks and non-bank financial institutions, domestic and cross-border. - Ghana-specific note: a relatively large share of loans to firms in mining and cocoa industries consists of cross-border syndicated loans not covered in BoG’s regular supervisory reporting. - BoG conducts credit-to-GDP analysis quarterly using the HP filter with smoothing parameter λ=400,000 (BCBS, 2010). - Available sample period: 2006: Q4–2025: Q2. - Limitations and sensitivities: - Estimates may be sensitive to one-sided versus two-sided HP filter choice. - Sample length lies at the lower end required for reliable estimation under λ=400,000. - Structural change, high GDP volatility, FX valuation effects, and past financial distress can complicate gap analysis. - Robustness checks performed: one- and two-sided filters and varying sample periods; R and Octave codes and scripts for extended Trend-Cycle models allowing structural breaks provided to authorities. - Credit-to-GDP gap provides limited information on duration and volatility of Ghana’s credit cycle; gap appears partly consistent with a credit cycle around 8 years but recent exogenous shocks (Covid-19 and sovereign debt distress) complicate interpretation. - Alternative credit indicators evaluated: - DRC: Δ private nominal credit (annualized) over a two-year period relative to a moving average of nominal GDP (8 quarters). DRC in percentage points. Not estimated; captures strong and protracted credit booms; less sensitive to GDP volatility. - Difference in credit-to-GDP ratio (2-year): Δ credit-to-GDP ratio (percentage points) over a two-year horizon; more sensitive to GDP volatility. - Real credit growth: a leading indicator and predictor of financial crises; sustained credit growth above long-term averages may precede credit-to-GDP gap signals. - Buffer guide and mapping: - Buffer guide translates evolution of credit indicators into implied CCyB rates using original BCBS (2010) formula with adjusted thresholds linked to historical distributions of indicators. - Credit indicators benchmarked against fixed percentiles in their historical distributions. - Illustrative DRC mapping example: - CCyB is increased whenever DRC values are between 2.5pps and 5pps. - Beyond lower threshold level L=2.5pps, CCyB rate increases in equal steps such that CCyB rate 2.5 percent corresponds to a DRC indicator value of 5pps (upper threshold). - Basel illustrative rule (as provided): - Credit-to-GDP gap ≤ 2 percent (lower threshold L) => CCyB rate = 0 percent - Credit-to-GDP gap ≥ 10 percent (upper threshold H) => CCyB rate = 2.5 percent - Authorities may choose their own thresholds consistent with national specifics and risk tolerance. - Indicator benchmarking and signaling: - Comparing indicators at similar percentiles (e.g., around the 60th percentile) provides a basis for assessing signaling properties. - Benchmarking suggests credit-to-GDP gap would trigger a positive CCyB rate at a relatively later stage of the cycle; other indicators show broadly comparable activation points with minor differences. - Time profiles differ: credit-to-GDP gap mapping implies a steep time profile of implied CCyB increases; DRC tends to rise more gradually. - Supporting indicators: - Toolkit includes macro-financial indicators, asset prices, spreads and volatility, lending standards, profitability, and resilience. - Supporting indicators provide context: interest rates, loan spreads, lending standards, sectoral and currency disaggregation, macro-financial indicators, profitability and resilience. - Activating/increasing CCyB is less costly when banks are profitable, profitability forecasts favorable, and voluntary capital buffers sufficient. - Indicators should be linked to financial cycle phase and growth momentum (subdued, standard/neutral, elevated). - Assessment relies on both indicators and expert judgment; indicators can conflict and should not be applied mechanically. - Composite indicators can help capture build-up of cyclical systemic risk but introduce trade-offs (indicator selection, weighting, normalization); mission shared codes for exploratory composite construction. ### D. CCyB Release - Timing and rationale: - CCyB should be released in the recessionary phase of the financial cycle. - Prompt partial or full release may be necessary when banks face severe stress to help avoid sharp declines in credit supply as systemic losses materialize. - CCyB may also be released where systemic losses have not materialized yet forward-looking indicators point to imminent crisis. - Prompt release helps avoid reductions in credit supply motivated by uncertainty about timing of release. - Indicators for release decisions: - Release decisions rely more on near-contemporaneous indicators of banking distress (different set than tightening decisions). - Release indicators primarily capture systemic loss materialization: asset quality and credit losses, banks’ loss coverage capacity (profit and components of bank capital). - An absolute decrease in banks’ capital and/or a decrease in the system-wide capital ratio provide a strong signal of credit cycle reversal and materialization of systemic risks. - Quantitative reference: - For setting CCyB rate, BoG may regard credit and other losses of at least 0.25 percent RWA capital decline as systemic losses (justification: 0.25 percent RWA represents the smallest incremental part of the CCyB rate). - Banks’ available capacity to supply credit: - Systemic loss materialization and loss absorption capacity jointly determine banks’ available capital capacity for lending. - Available capacity represents the additional amount of credit (an upper bound) that institutions can provide from capital in excess of minimum capital requirements and capital buffers. - Gradual lowering: - BoG may lower CCyB gradually when cyclical risks are receding and systemic losses have not materialized, but should exercise caution in absence of clear signals. - In mild recessions or slowdowns, non-financial sector may continue servicing loans, observed credit losses remain relatively low and absorbed by profits; CCyB likely relaxed gradually. ### E. CCyB Communication - Foundational document: - Useful to communicate adoption of CCyB framework with a dedicated policy document stating policy objective, tool operation, and BoG strategy for use, linked to financial stability objectives; include operational details and practical example scenarios. - Decision cadence and publication: - CCyB decisions typically taken quarterly; IMF guidance recommends publication of a meeting record. - For Ghana: decisions could be semi-annual during stable periods and more frequent when warranted. - Records should include rationale; when no changes, a posting on central bank website may suffice; when changes occur, issue a press release and possibly hold a press conference. - Information to publish: - (a) the applicable countercyclical buffer rate; - (b) the relevant credit-to-GDP ratio and its deviation from the long-term trend; - (c) the buffer guide; - (d) the justification for that buffer rate; - (e) where buffer rate has been increased, the date from which institutions must apply that increased buffer rate for institution-specific CCyB calculations; - (f) a reference to exceptional circumstances in case a shorter deadline for application of increased CCyB rate was announced; - (g) the indicative period and justification during which no increase in the buffer rate is expected (after CCyB release). - Publishing stress-test results may help ensure market confidence in adequacy of banks’ capital. - Forward guidance: - Provide forward guidance on expected timeline for reaching stated CCyB levels when increased from zero; condition path of increase on vulnerability developments where appropriate. - When releasing the buffer, communicate how long buffer is expected to remain released before tightening is considered, to reassure banks about using released buffer. *Source: Annex II. The CCyB Methodology and Toolkit (tarea2026024) — IMF Technical Assistance Report* --- _Source: https://www.imf.org/-/media/files/publications/tar/2026/english/tarea2026024.pdf_