Joe Jackson, Director of Operations (D0), Dalex Finance and Leasing Company, has urged the financial sector to focus on liquidity without haircuts so as to enhance the confidence of its customers.
According to Dalex’s DO, the priority for the financial sector, while working on dealing with its solvency and capital adequacy ratios is focusing on its liquidity issues. This, Mr. Jackson indicated will serve as a motivation for customers.
“The liquidity is, somebody comes to my door and says I want 5,000 cedis which I gave you; you should be able to return that money. So long as somebody knocks on my door and I keep paying, the confidence will be there. We’re very clear with that at Dalex Finance, and I’m sure the whole banking sector is clear.”
Joe Jackson
Uncertainty and mistrust will be the plight of banks should they fail to return customers’ monies to them promptly on request, Joe Jackson said.
As long as customers do not face liquidity issues, Joe stated, Ghanaians will continue to have confidence in the banking sector.
Joe therefore urged banks to tackle any liquidity issues in order to stay on the good side of customers when they start placing demands for their monies.
“So long as you return that money promptly, you return that money without any haircuts – it’s the government that is giving the haircuts, financial sector hasn’t talked about giving any haircuts – the confidence will be there.”
Joe Jackson
Government should be more transparent about its liquidity support fund
Joe Jackson also called for more transparency in the government’s liquidity support fund.
Without a very clear guideline on how to access the funds and transparency in how the fund money is disbursed and managed, financial institutions could be put at risk, Joe opined.
“So it comes down to the issue of this liquidity fund. If the fund operates as it has been promised, if it is properly funded – you see liquidity is not an issue you can postpone, when somebody needs liquidity today, you can’t tell him come back next week because the fund doesn’t have money.
“The fund must be there; it must have full funding even before the problems have thought of arising. So long as that happens, so long as the fund is transparent, so long as the fund details are clear, so long as we know how to access that fund and use it for our liquidity purposes – both banks and non-banks and all other affected institutions, the confidence will be there. There will be no problem.”
Joe Jackson
Government’s Liquidity Fund – GFSF
The Ghana Financial Stability Fund (GFSF) is a ₵15 billion facility provided by government and its development partners to provide liquidity to financial institutions that fully participate in the Domestic Debt Exchange Programme (DDEP).
According to a statement from the Financial Stability Council in Accra, financial institutions such as banks, SDIs, pension schemes, collective investment schemes, fund managers, broker/dealers, and insurance firms that participate in the Debt Exchange in full can access the Fund for increased liquidity support starting from the Exchange’s completion date.
As stated in the announcement, the Council is in the process of creating specific operational guidelines, and the Bank of Ghana will oversee the management of the Fund.
As per the statement, the Council will offer continuous guidance and supervision for utilizing the GFSF. This includes regulating instruments to minimize the financial stability risks associated with the Debt Operation and determining accounting treatment.
