The Bank of Ghana has cautioned against the practice of making cash payment of foreign currency to large corporate customers. This according to the central bank “exerts avoidable pressure on the foreign exchange market” while disrupting efforts of maintaining the stability of the Ghanaian cedi. In a statement sent to all banks and the general public on Wednesday, August 20, BOG was concerned about the activities of large corporations including Bulk Oil Distribution Companies and mining companies in the banking system where cash withdrawals of foreign currency are made without recourse to the Bank of Ghana’s own centralised foreign currency management system that ensures there is enough foreign currency reserve for international trade.

FCY which commonly refers to Foreign Currency Yield in banking is used to describe the return earned on investment denominated in foreign currencies. As an economy whose value chain is heavily dependent of foreign currency for imports, an unregulated withdrawal of foreign currency from the accounts of foreign currency holders could pose undue stress on the local currency, therefore by in order for the large corporates to have their foreign currency and still maintain the strength of Ghana’s reserve position, the central bank further directed that transactions of that nature should be supported by the equivalent foreign currency amounts deposited at the same banking institution where the request for withdrawal would be made as failure to comply would attract the appropriate regulatory sanctions. The statement added, “Banks must retain proper documentation to confirm the source of funds for every payout”.

“The Bank of Ghana remains committed to supporting the operations of Large Corporates, recognizing their critical role in sustaining petroleum supply, mineral exports, and other essential sectors of Ghana’s economy.”, it continued. Meanwhile, efforts are underway through a partnership between BOG and the government to put in mechanisms that caters for large corporate institutions as a safeguard for market stability without interrupting vital supply chains.