Banking consultant Dr. Richmond Atuahene has warned against proposals for the Bank of Ghana to allocate a portion of the Cash Reserve Ratio (CRR) to support local cocoa purchasing companies. His comments come after the CEO of COCOBOD, Dr. Randy Abbey, suggested that 2 to 3 percent of these reserves be redirected to sustain local players in the cocoa sector. In an interview with Citi Business News, Dr. Atuahene emphasised that the reserve is a monetary policy tool strictly meant for liquidity management and should not be used to finance private enterprises.
Dr. Atuahene explained, “These funds are in cedis that have been mobilized and locked at the Central Bank. They are intended to ensure that there is always liquidity for banks to operate. If these funds are diverted to purchase cocoa, it reduces the liquidity available to banks at the Central Bank.” He also pointed out that the Bank of Ghana does not pay interest on these reserves, referring to them as “unremunerated reserves.” “Let’s be clear,” he continued.
“When the Bank of Ghana requires banks to hold a certain percentage of deposits as reserves, it does not pay interest on those funds. So are we now suggesting that money, which banks are already not earning interest on, should be used for cocoa purchases? I strongly disagree.” Dr. Atuahene cautioned that tampering with statutory reserves for commercial purposes could undermine the credibility of monetary policy and destabilize the financial sector.
