The Bank of Ghana (BoG) has proposed a major regulatory change that could reshape how commercial banks manage their cash reserves, prepare for financial shocks and protect their ability to meet customers’ withdrawal demands.
Under the proposed Liquidity Coverage Ratio (LCR) Directive, 2026, banks would be required to maintain high-quality liquid assets sufficient to cover their projected net cash outflows over a 30-day period of financial stress. The central bank is targeting a minimum Liquidity Coverage Ratio of 100 per cent, establishing a benchmark intended to ensure that banks can withstand sudden funding pressures without struggling to meet their financial obligations.
The proposal, contained in an exposure draft published for public consultation, signals a stronger regulatory push to ensure that liquidity risks do not threaten the stability of Ghana’s banking sector.
Banks and other interested stakeholders have until November 30, 2026, to submit comments before the central bank finalises the directive.
BoG Moves to Strengthen Banks’ Financial Defences
The proposed 100 per cent liquidity threshold would require banks to hold eligible, unencumbered high-quality liquid assets equal to or greater than their total net cash outflows projected over the next 30 calendar days under prescribed stress conditions.
In practical terms, banks would need to demonstrate that they possess sufficient readily available assets to meet anticipated cash demands even when financial conditions deteriorate sharply.
Such pressures could arise when customers withdraw substantial amounts of money, wholesale funding becomes difficult to access, financial obligations mature or borrowers draw on credit facilities already committed to them.
These events can place considerable pressure on a bank’s available cash, particularly when several funding pressures occur simultaneously.
The proposed framework is designed to strengthen banks’ capacity to absorb financial and economic shocks while limiting the risk that liquidity difficulties at one institution spread across the wider financial system.
Although the directive remains subject to consultation, its potential implications extend beyond treasury departments and regulatory compliance teams. The ability of banks to meet their obligations during periods of stress is central to depositor confidence and the smooth functioning of the financial system.
Which Assets Will Qualify Under the New Rules?
The proposed directive identifies cash, qualifying balances held with the Bank of Ghana and eligible government securities among the assets that may count towards the required liquidity buffer.
Other securities may also qualify, provided they satisfy the conditions specified in the draft. Applicable regulatory discounts, known as haircuts, would affect how certain assets are valued for compliance purposes.
The central bank is also proposing limits on the composition of banks’ liquidity holdings to prevent institutions from relying too heavily on assets that may be less readily convertible into cash during periods of market stress.
Under the draft, Level 2 assets would be capped at 40 per cent of the total stock of high-quality liquid assets, while Level 2B assets would be limited to 15 per cent.
These restrictions would influence how banks allocate their assets and manage their liquidity positions.
Banks may therefore need to reassess their treasury strategies, investment portfolios and cash-flow forecasts to ensure they can satisfy the proposed requirements without unnecessarily constraining their operations.
The effectiveness of the framework will depend partly on how well banks balance the need to maintain sufficient liquid assets against the demands of lending, investment and other banking activities.
Banks Face Tougher Liquidity Stress Tests
Beyond maintaining the minimum liquidity ratio, banks would be expected to strengthen their internal assessment of potential funding pressures.
The draft directive requires institutions to conduct their own liquidity stress tests, including scenarios that are more severe and extend beyond the minimum 30-day supervisory requirement.
This would encourage banks to look beyond routine cash-flow projections and assess how their balance sheets might respond to more difficult financial conditions.
A bank could appear adequately funded under normal circumstances but face significant pressure if large deposit withdrawals coincide with reduced access to wholesale funding and substantial maturing obligations.
The proposed stress-testing requirement would push institutions to examine such risks in advance and develop appropriate responses.
Banks would also need to monitor their liquidity positions closely, maintain reliable forecasting systems and ensure that their internal policies reflect the risks associated with changing market conditions.
These measures are intended to improve preparedness rather than leave institutions scrambling for cash after a funding crisis has already begun.
September 2027 Deadline Sets Implementation Clock
The BoG has proposed September 1, 2027, as the effective date for the directive. Banks would be expected to align their internal policies, processes and systems with the requirements by August 31, 2027.
The draft also provides for a one-year pilot period following publication, during which banks would submit quarterly reports to the central bank using prescribed templates. Monthly reporting would follow after the pilot period.
The reporting arrangements would give the regulator a structured way to monitor liquidity positions and assess compliance with the new framework.
The implementation timeline means banks would need to prepare for changes in their liquidity management systems, reporting procedures and internal controls if the proposal is adopted.
However, the final requirements will depend on the provisions approved by the central bank after considering stakeholder submissions.
Stakeholders Get Chance to Influence Final Directive
The BoG is inviting banks and other interested parties to examine the proposed framework and recommend changes before it is finalised.
Comments must be submitted by email to [email protected] no later than November 30, 2026.
The central bank has indicated that it will consider all material comments received and provide written explanations of how they were treated, including whether they were incorporated into the final directive.
The consultation is particularly important because the proposed requirements could affect banks’ investment decisions, liquidity buffers, treasury operations and regulatory reporting obligations.
The LCR proposal will also complement the Liquidity Risk Management Directive, 2026, and the Liquidity Monitoring Tools Directive, 2026, creating a broader framework for managing and monitoring liquidity risks.
If adopted, the directive would establish a more structured benchmark for how Ghanaian banks prepare for short-term financial stress. Its ultimate impact will depend on the final rules, the readiness of individual institutions and the central bank’s approach to implementation and supervision.
