Vice President, Dr. Mahamudu Bawumia has tasked the newly inaugurated Board and management of the Ghana Deposit Protection Corporation (GDPC) to adopt innovative ways of ensuring that Ghana’s Deposit Insurance Scheme is operated in a manner that is consistent with protecting depositors’ funds.
Operating in a largely reformed financial sector, he said “the Corporation needs to ensure that the necessary public education about the Scheme, its operations and benefits to every depositor is carried out effectively.”
Dr. Bawumia was speaking at the 2019 International Association of Deposit Insurers (IADI) Africa Regional Committee Technical Assistance workshop in Accra.
The purpose of the workshop, hosted by the Bank of Ghana (BoG) and the GDPC was to allow for closer interaction among experts working in different areas of regulation and financial stability to share regional and global experiences.
Themed “Deposit Protection – A Catalyst for Financial Stability,” the workshop was also to ensure that best practices were incorporated in current behaviour to foster trust and enhance confidence in the country’s financial sector.
“Such education is an invaluable public good and we must get on with it soon as possible,” the Vice-President advised.
According to him, it was critical that the general public gained the confidence that even in the event of a failure of a financial institution, “the funds of depositors are secured, at least to a certain limit.”
The Deposit Insurance Scheme in addition to the sound prudential regulation of the Bank of Ghana should ensure that the Ghanaian financial sector is set on a good route to financial stability.
Dr. Bawumia pointed out that there was ample evidence from across the globe that the presence of strong safety nets was the key to restoring and maintaining public confidence in the financial system.
“There is ample evidence globally that deposit insurance systems have played an essential role in protecting bank customers and reducing vulnerabilities of the financial sector,” he added.
Dr Bawumia described the theme of the workshop as one that was of great interest and relevance to Ghana since “deposit insurance can enhance the stability of the financial system by preventing bank runs and support the stability and smooth operation of the economy.”
The Vice President was confident that Ghana’s membership of the IADI would help steer the affairs to the Corporation in the right direction of international best practice.
Governor of the BoG, Dr Ernest Addison hailed the establishment of GDPC, saying it had come as a big relief and a welcome addition to Ghana’s financial safety net apparatus, as it “puts the nation in a state of readiness to better manage the failure of banks and deposit-taking financial institutions in the future.”
Dr. Addison was hopeful that the workshop will offer participants the opportunity to learn more about the roles and functions of deposit protection schemes and the relevant emerging trends in that field.
“Hopefully, young deposit protection schemes such as the GDPC will learn a lot from more experienced deposit insurers represented at this workshop, especially as the role of deposit insurers in today’s financial environment continues to evolve and advance,” he noted.
Ghana’s Deposit Protection Scheme became operational on September, 30, 2019.
The Scheme will protect small depositors from losses incurred as a result of bank failure or resolution and support the development of a safe, sound, efficient and stable market based financial system in the country by ensuring prompt payouts to insured depositors in the event of a bank failure or resolution.
Source: Isaac AIDOO,thefinderonline.com