The Bank of Ghana(BoG) has refuted claims that the issuance of dollar denominated bond in the country will drain dollar accounts of banks.
Government recently raised a total of 94.62 million dollars in its first local dollar denominated bond at a rate of 6.0 percent.
Reacting to the move, the Managing Director of CAL Bank, and the CEO of Stanbic Bank both criticized the Finance Minster for competing with banks in the country for dollars.
But speaking to Citi Business News, the Head of Banking Supervision at the Bank of Ghana, Raymond Amanfu described the criticisms as misplaced since banks can pay interest on dollar accounts if they want to prevent investors from moving it into bonds.
“Are you saying that we should prevent the people from investing their money where they want to invest?, It is not a law that don’t pay interest. Every bank and how it pays it interest, interest is not fixed, am surprised that people are saying all these,” he said adding banks can pay interest rates on dollar account to attract investors.
According to him, investors are always interested in high returns hence will move their funds to portfolios that have high interests and low risks.
“Some banks pay interest on their foreign deposits others don’t, others pay depending on how much you have, it’s just like any interest, so if your interest is competitive why would somebody go and buy a bond on their foreign deposits. Somebody may not want to wait for one year to take his money so he won’t go and buy the government paper,” he stressed.
“So there are a whole lot of dynamics, government is offering a bond, it is just like when you go to some banks, they will give interest rate at 1 percent, some will give 3 percent somebody will also say I will give 6 percent, if you think government is going to take it and therefore you will give 6.5 percent, people are rationale, they will take the money there”.
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(Via: CitiFM Online Ghana)