In a significant move to regulate the foreign exchange market, the Bank of Ghana (BoG) has announced stringent measures to prevent foreign exchange bureaus from advertising their rates on social media platforms.
This directive was part of the 118th monetary policy statement delivered by Dr. Ernest Addison, the Governor of the Bank, on Monday, May 27, 2024.
Ensuring Market Integrity
The BoG's decision to ban social media advertisements by forex bureaus is aimed at curbing unauthorized and potentially misleading practices that can destabilize the foreign exchange market.
Dr. Addison emphasized that these measures are crucial for maintaining the integrity and transparency of the market.
"The Bank is fully aware of the operations of illegal operators in the foreign exchange market and is working with the Financial Intelligence Centre to sanitize the foreign exchange market," Dr. Addison stated.
"Foreign exchange bureau monitoring will be stepped up to ensure compliance with their regulatory framework. In line with this, all foreign exchange bureaus advertising rates outside their premises and on social media platforms must immediately desist from the practice."
Addressing Unauthorized Entities
The BoG's initiative is specifically targeted at addressing the activities of unauthorized entities within the foreign exchange market.
By prohibiting online advertising, the Central Bank aims to reduce the influence of informal and often unregulated currency exchange services that thrive on digital platforms.
This is expected to diminish the attractiveness of these informal avenues, thus fostering a more transparent and regulated market environment.
Collaboration and Compliance
To ensure the success of this initiative, the BoG has established a task force dedicated to monitoring all foreign exchange bureaus for compliance.
Additionally, the Central Bank has partnered with the Ghana Association of Banks to simplify the documentation requirements for foreign transactions.
This collaboration aims to make formal channels more accessible and user-friendly, thereby encouraging more participants to engage in regulated foreign exchange activities.
Mitigating Market Sentiments
Dr. Addison also highlighted the impact of market sentiments and public pronouncements, especially in an election year, on the foreign exchange market.
He urged all stakeholders to manage their communications carefully to avoid weakening confidence in the local economy.
Proactive Measures for Corporate Entities
In a related effort to stabilize the market, the BoG has proactively addressed the foreign exchange requirements of corporate entities.
This move is designed to alleviate pressure on commercial banks and ensure that the needs of large-scale operators are met without disrupting market equilibrium.
The Bank of Ghana's directive against social media advertising by foreign exchange bureaus is a decisive step towards enhancing the transparency and stability of the foreign exchange market.
By eliminating unauthorized practices and promoting regulated avenues, the Central Bank aims to create a more trustworthy and efficient market environment.
As the task force begins its work, the BoG remains committed to enforcing these regulations and supporting the formal foreign exchange sector.
Bank of Ghana's New Measures
Task Force Establishment: A dedicated team to oversee and ensure compliance among forex bureaus.
Partnership with Banks: Simplification of foreign transaction documentation to reduce informal exchange reliance.
Corporate Support: Addressing corporate foreign exchange needs to relieve commercial banks.
Advertising Ban: Prohibition of rate advertising on social media to curb unauthorized practices.
Market Sentiments: Managing public communications to maintain economic confidence.
These comprehensive measures reflect the BoG's commitment to fostering a robust and transparent foreign exchange market in Ghana.
Story by: Joshua Kwabena Smith
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