BOG Launches Interbank Settlement System

Banking operations in Ghana received a major boost on Thursday when the Central Bank launched the Ghana Interbank Settlement (GIS) System with the objective of enforcing electronic processing and settlement of interbank transactions on gross basis in real time.

Hitherto, settlement systems between commercial banks and the Bank of Ghana (BOG) took several days.

Launching the system, Dr Paul A. Acquah, Governor of BOG, said Ghana now had in place the most efficient inter-bank money market in the West African Sub-Region.

"With the growing inter-bank market, the values transferred between participants in a single transaction are growing exponentially."

Ghana is the fifth country after South Africa, Mauritius, Malawi and Angola to have an interbank system in Africa.

Dr Acquah said the new system had been the attention of most central banks that wanted to contain systemic risk arising from large value payment systems by developing Real Time Gross Settlement Systems.

He noted that an automated large value interbank payment system greatly facilitated the establishment of short-term money and capital markets.

Dr Acquah said the risk of deferred payments were absent in this system while it provided treasury managers with tools to manage their funds efficiently as they could sit in their offices and monitor the balance of their accounts with the Central Bank.

"It galvanizes all counterparts in a banking transaction and all stakeholders to show collective interest in the efficiency and safety of the system."

The Governor thus called for an efficient retail payments system.

"This is the area for commercial banks to introduce products that directly benefit customers but for which the Central Bank carries supervisory responsibility".

He said the Bank had noticed with interest the development of retail products, saying this should be a shared responsibility instead of the current situation where banks wanted to go it alone.

"Commercial banks must, therefore, balance competition with cooperation."

Outlining the GIS system, Mr Damian Zaato, Project Coordinator, said transactions settled in the system were final and irrevocable, eliminating the settlement and systemic risks associated with existing payment systems.

He said only large value or time critical payments were processed through the GIS system while low value and high value transactions did not have to be subjected to the discipline and rigours of the RTGS.

He said the system would boost Ghana's promotional efforts as a financial nerve centre and gateway to West Africa as payment transactions would be settled immediately as they were received thus reducing interbank indebtedness to a minimum.

"It also ensures that banks with liquidity problems are exposed on timely basis."