The Bank of Ghana (BoG) has introduced a major policy shift that is set to significantly improve its financial position and help reduce its operational losses this year. During Wednesday’s Monetary Policy Committee (MPC) press conference, the Governor announced a structural change to how commercial banks must hold cash reserves with the central bank.
According to the official press release, “The Committee decided to amend the dynamic Cash Reserve Ratio to a uniform ratio of 20 percent, maintained in the domestic currency, effective June 4, 2026.”
While it sounds highly technical, the business reality behind this move is straightforward: it grants the central bank access to what is essentially “free money” to manage liquidity, moving away from more expensive options.
Moving Away from Costly Open Market Operations
To understand why this is a win for the central bank’s balance sheet, it helps to look at how the BoG handled excess cash in the banking system last year and during the early part of 2026.
Previously, the bank relied heavily on Open Market Operations (OMO). This involved issuing BoG bills to commercial banks to soak up extra liquidity. However, because interest rates were high, the central bank had to pay massive interest returns to these commercial banks. These high payout costs became a major burden, heavily contributing to the central bank’s operational losses.
The new uniform 20 percent Cash Reserve Ratio (CRR) changes the game. Instead of the central bank borrowing money from commercial banks at high interest rates, commercial banks are now legally required to keep 20 percent of their deposits directly with the BoG in local currency. Because the central bank does not pay interest on these required cash reserves, it gains a massive pool of zero-cost liquidity to manage the monetary system.
A Major Boost to Reducing Losses in 2026
This shift directly addresses the central bank’s internal cost-cutting goals for 2026. By replacing interest-bearing OMO bills with a non-interest-bearing, uniform 20 percent reserve requirement, the BoG is effectively stopping a major financial leak.
Financial analysts point out that this intervention provides a much cheaper path to stabilizing the banking sector’s liquidity. With billions of cedis shifting into interest-free reserves starting June 4, the central bank’s interest expenses are expected to drop sharply. This structural relief will play an important role in shrinking the BoG’s overall operational losses and strengthening its balance sheet for the rest of the year.
In 2025, banks made fantastic profits significantly due to OMO. It appears it is pay back time, as burden is shifted to the banks in 2026.
