The Institute of Economic Affairs (IEA) is recommending that the Bank of Ghana (BoG) allow its Economic Intelligence Unit to collaborate with security agencies to oversee illegal forex transfers through banks.
The IEA also suggested that the BoG should supervise other channels and money laundering activities to decrease the demand for forex.
In a statement dated Monday, May 20, the IEA proposed measures that the government could implement to curb the depreciation of the cedi.
The IEA believes that curbing these unlawful forex transactions would help control the demand for forex.
“The third option is for BoG to use its Economic Intelligence Unit, working together with the
security agencies, to monitor acts of illegal FX transfers through banks, forex bureau and
other channels as well as money laundering to reduce the demand for FX. Checking these
illegal FX dealings would help stem the tide of FX demand. We can envisage some short-term measures that can be taken towards boosting FX supply and controlling demand.”
Furthermore, the IEA advised the BoG to enhance the enforcement of forex market regulations.
“The second option is for BoG to step up the enforcement of FX market regulations. This is done everywhere. The regulations include: FX carry-on limits for travellers; supportive documentation for FX purchases and outward transfers; non-pricing of goods and services in FX; non-payment of FX to Ghanaians for their services; and trading in FX. Enforcing these regulations would generally limit FX demand.”
The IEA also cautioned the BoG to proceed with care and maintain discretion to avoid creating a sense of desperation.
“We would, however, caution BoG to proceed cautiously and, in particular, operate secretly so as to not give a sense of desperation on its part as this could lead to increased speculative demand for FX, while also driving FX activities underground. Actually, the best time to step up the enforcement of FX market regulations is when the market is calm rather than when it is in a turbulent state like we are currently experiencing.”
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