Bank of Ghana to introduce Credit Transfer System

Accra, March 16, GNA - The Bank of Ghana (BoG) would soon introduce a paper Credit Transfer System to complement debit instrument clearing and provide the user with more choices.

This would enable both banks and non-banking customers to transfer funds with the banking system using Credit Transfer Voucher (CTV), Mr Van Lare Dosoo, Deputy Governor, said in Accra on Tuesday.

Mr Dosoo, who was speaking at a three-day Regional Seminar on Payment and Settlement Issues jointly organized by the BoG and the European Central Bank (ECB) said the CTV would be cleared multilaterally and the net position of banks settled through the Ghana Inter-bank Settlement (GIS) system

The seminar was on the theme: "Understanding Payment and Settlement issues through Co-operation."

Extensive public education by banks and financial institutions was currently underway to sensitise the public on the product, and it was expected that the system would be automated to become a bulk electronic credit clearing system, he noted.

Seminar participants from Malawi, Benin, the Gambia, Ghana and Guinea would be taken through topics including legal framework for payment system in Euro System, Role of Central Banks in Payment System and large value payment systems in Euro.

The GIS system, Mr Dosoo said, handled on average, 150 transactions per day with a value of in excess of 980 billion cedis, while the cheque-clearing system on the other hand cleared 17, 000 cheques with a value of 350 billion cedis.

The Deputy Governor said the seminar, the first of its kind to be organized outside the headquarters the ECB, was to help reduce risk in payment, clearing and settlement systems.

It and speed up exchange and settlement of funds and securities to levels comparable to those prevailing in the major industrialized countries, among other things.

He said payment systems were potential transmission mechanisms for systemic financial crisis at both domestic and cross-border levels adding that such crises gave rise to large risk for Central Banks, banks and Governments.

He noted that for these reasons Central Banks played leadership roles in payment of system, though the extent varied from country to country by ensuring timely and final irrevocable settlements systems and designing policies and procedures to eliminate or contain payment and systemic risks among other things.

He announced that Ghana's payment system now had most of the major features found in most developed economies with Real Time Gross Settlement (RTGS) system at its core for high value interbank electronic payment.

"It also meets the high standards required for acceptance by International Community as it is in compliance with the Core Principles for Settlement Payment Systems (CPSS) of the Bank for International Settlement (BIS) in Balse, Switzerland," he said.

Mr Dosoo said constraints in supply of energy and efficient telecommunications services were some of the bottlenecks that limited the speed of reform and the introduction of new electronic retail payment product.

Mr Dosoo noted that many other challenges, however, remained, as far as the operations and oversight of payment in the banking sector were concerned, and called on participants to approach the Seminar with open minds, digest and compare what they would learn with what was happening in their various countries.

Mr Millison Narh, Head, Banking Department of BoG, said the seminar was to cooperate and collaborate in the areas of Payment Systems development, oversight and management and that the systems were the essential part of the financial infrastructure of the market economy. He explained that payment systems made it possible for exchanges of goods, services as well optimal allocation of resources for economic development, and provided effective implementation of monetary policy by the Central Banks.