DDEP: There will be confidence as long as there is liquidity – Joe Jackson
Director of Operations, Dalex Finance and Leasing Company, Joe Jackson, says Ghanaians will continue to have confidence in the banking sector as long as they do not face any liquidity challenges.
According to him, should banks begin to fail to return customers’ monies to them immediately when requested for, it could create uncertainty and fuel mistrust.
“So long as somebody knocks on my door and I keep paying, the confidence will be there. We’re very clear with that at Dalex Finance, and I’m sure the whole banking sector is clear,” he said on Joy News.
He urged banks to sort out any liquidity issues in order not to be found wanting when customers start demanding their monies from them.
“What is required whiles we quietly deal with our solvency and capital adequacy ratios, we must first deal with the liquidity issues. The liquidity is, somebody comes to my door and says I want 5,000 cedis which I gave you; you should be able to return that money.
“So long as you return that money promptly, you return that money without any haircuts – it’s the government that is giving the haircuts, financial sector hasn’t talked about giving any haircuts – the confidence will be there,” he advised.
Joe Jackson also called for more transparency in the government’s liquidity support fund.
The Ghana Financial Stability Fund is a ₵15 billion facility provided by government and its development partners to provide liquidity to financial institutions that participate fully in the Domestic Debt Exchange.
A statement issued in Accra by the Financial Stability Council said all financial institutions (banks, SDIs, pension schemes, collective investment schemes, fund managers, broker/dealers, insurance firms) that fully participated in the Debt Exchange could access the Fund for augmented liquidity support, with effect from the date of completion of the Exchange.
It said the Fund would be managed by the Bank of Ghana under unique operational guidelines being developed by the Council.
The statement said the Council would provide ongoing advice and oversight for the use of the GFSF, including accounting treatment and regulatory Tools to Mitigate Financial Stability Risks from the Debt Operation.
However, Joe Jackson said without a very clear guideline on how to access the funds and transparency in how the fund money is disbursed and managed, financial institutions could be put at risk.
“So it comes down to the issue of this liquidity fund. If the fund operates as it has been promised, if it is properly funded – you see liquidity is not an issue you can postpone, when somebody needs liquidity today, you can’t tell him come back next week because the fund doesn’t have money.
“The fund must be there, it must have full funding even before the problems have thought of arising. So long as that happens , so long as the fund is transparent, so long as the fund details are clear, so long as we know how to access that fund and use it for our liquidity purposes, both banks and non-banks and all other affected institutions, the confidence will be there. There will be no problem,” he said.