Examine Basel Accord critically - Governor

Accra, Feb. 17, GNA - Banking Supervisors in West and Central Africa have been urged to examine the new Basel Capital Accord which aims at safe and sound financial banking systems.

They are also to monitor and access on a continuous basis, the risks associated with banking, which included credit risk, market risk liquidity and funding risk and legal and reputation risks.

Dr Paul Acquah, Governor of the Bank of Ghana (BoG) made this call when he addressed the opening session of a three-day seminar for Senior Banking Supervisors from West and Central Africa in Accra.

It is being organized in association with the Committee of Banking Supervisors from West and Central Africa and Financial Stability Institute (FSI) of Switzerland.

"Supervisors must develop systems of measurement that will capture the extent of exposure to these specific risks and the capacity to apply these principles," he said.

The seminar is meant to acquaint participants with the New Basel Capital Accord, which proposes capital adequacy framework based on three complementary pillars. These are minimum capital requirements, supervisory review process and market discipline.

Dr Acquah said supervisors in the Region faced very difficult tasks and challenges with some of them operating under conditions of higher macroeconomic volatility than in matured economies.

He was however, quick to add that banks had emerged from a period of distress, had cost income indicators that might be distorted, especially when they spent huge sums in providing for bad debts and restructuring their operations.

He asked the Central Banks officials to pay greater attention to the Accord since there were many small banks with high credit risks that often made them prone to financial distress in settings where contract enforcement was weak.

Participants are from Ghana, Nigeria, Liberia, Sierra Leone, UEMOA, WAMZ and WAMI.

Mr Roland Raskopf, Senior Financial Sector Specialist of FSI; told the Ghana News Agency (GNA) that the document on the Accord would be ready by the middle of 2004 for implementation by G10 banks in 2006. He explained that the USA would have its implementation slightly different from that of the Europeans and actually start in 2006. "It creates a platform for new international standard negotiation between G10 countries and emerging markets while enhancing financial stability, a pre-condition for growth."

On the benefits to Ghana, Mr Raskopf said when the matured markets start it would bring pressure to bear on African markets to stick to strict risk culture with responsibility very high on the agenda. 17 Feb. 04