DDEP: Gov’t directs financial sector regulators to reduce capital, liquidity requirements for financial firms 

Government has directed the various financial regulators in the country – SEC, BoG, NIC and NPRA – to temporarily reduce capital and liquidity requirements for financial firms that decide to participate in the government’s Domestic Debt Exchange Programme (DDEP).

In addition to the reduction in capital and liquidity requirements, regulators of financial institutions are to also suspend any rule or rules that may have an adverse impact on the liquidity or solvency of financial institutions.

The move by government forms part of measures aimed at mitigating the potential severe impact of the DDEP on the operations of banks, specialised-deposit taking institutions, insurance firms, asset management firms, pension funds, collective investment schemes (CIS) among others.

“Financial sector regulators will temporarily reduce regulatory capital and liquidity requirements for regulated firms and schemes that voluntarily participate in the debt operation. Regulators will also suspend or delay any new rules that will have an adverse impact on liquidity or solvency,” read parts of the statement issued by the Bank of Ghana on Wednesday, December 7, 2022.

“Each regulator will communicate more specific reliefs to its regulated firms/schemes in due course,” it added.

Meanwhile, Government has announced a GHS 15bn liquidity support to financial institutions that decide to participate in its Domestic Debt Exchange Programme (DDEP).

The liquidity support is to aid the various financial institutions in the country meet their obligations to clients.

In the statement issued by the Bank of Ghana (BoG), the banking sector regulator noted that the FSF will be managed under unique operational guidelines developed by the Financial Stability Council.

According to the Central Bank, funds from the FSF can be accessed from the date of completion of the DDEP.

“The GFSF is being established with a target size of GHC 15 billion to be provided by the Government of Ghana and its development partners. 

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

“The Fund will be managed by the Bank of Ghana under unique operational guidelines being developed by the Financial Stability Council. 

“The Financial Stability Council will provide ongoing advice and oversight for the use of the GFSF,” it said.