There is a solid foundation for capital market - Governor

Accra, Nov. 27, GNA - Central Bank Governor, Dr Paul Acquah on Saturday noted that the current stable macro-economic environment had laid a solid foundation for the development of the capital market in the country.

He, therefore, urged bankers and other players in the financial industry to take advantage of the enabling situation to work toward development of the capital market, to improve the liquidity of trading in equities and open the financial system to long term capital flows. This, he said, was necessary to make available to domestic industry equity financing, reduce the dependence on short term debt financing through the banking system and broaden the scope of effective intermediation.

Dr Acquah was speaking at the 2005 Annual Bankers' Dinner to climax this year's Bankers Week celebration on the theme: "Achieving the Millennium Development Goals, Corporate Governance and Private Sector Development."

The Governor said a transparent market in which information on trading transactions was disseminated to traders and investors would improve efficiency, lower spreads, and attract more participants by increasing general confidence in the pricing process. However, he said, the integrity of the market would need to be protected with more rigorous rules and even-handed supervision to deter and provide investors effective recourse to misrepresentation and fraud to sustain confidence in the market.

"A capital market is only as strong as its component financial institutions and regulatory regime," the governor said and added that, the Credit Reference Bureau Law, which is required to support the development of the capital market, was expected to be implemented in 2006.

It is in this connection that the Bank of Ghana has been building a legal and institutional framework to remove deficiencies and develop the financial payments infrastructure and settlement systems, which were robust and competitive in the international trading system to reduce the vulnerability to external shocks.

Dr Acquah said to further boost the payment system the Central Bank was considering the option of switching to the codeline clearing and cheque truncation system alongside an automated Clearing House in line with global progress in cheque processing technology.

Touching on the economy, the governor said it had responded favourably to the macroeconomic environment by showing resilience in the face of external shocks such as hikes in oil prices.

Dr Acquah said the country needed to build on the current record of macroeconomic and political stability and move to high and sustainable growth, if the country was to achieve the Millennium Development Goals. As part of the programme, students who excelled in the examinations of the Institute were awarded prizes with Mr Christian Ofori-Atta receiving the overall best student prize.

The occasion also saw the elevation of six members of the Institute to the status of Fellows for invaluable contributions to the growth of the Institute, Nov. 27, 05