The Bank of Ghana recently raised GHS 705 million through the issuance of its own bills, known as Bank of Ghana (BoG) bills, with a maturity period of 56 days. The auction, which took place on June 19, 2023, saw the central bank selling short-term securities on the primary market to regulate money supply and manage liquidity in the banking system.
The interest rate at which the BoG bills were auctioned stood at 27.08 percent. While the value of bids made by commercial banks was not disclosed, the auction outcome highlights the central bank’s ability to attract funding from the domestic financial market in support of its monetary policy objectives.
The BoG bills are typically used in Open Market Operations (OMO), which are a monetary policy tool used by central banks to manage money supply. Through OMO, the central bank can influence the cost and availability of credit in the economy by adjusting the supply of money in circulation.
Moreover, the main function of central bank bills, like the BoG bills, is to manage the liquidity of the banking system by selling short-term securities on the primary market. This helps the central bank regulate the amount of money in circulation and ensure financial stability.
It is worth noting that the funds raised from the auction of the BoG bills are often loaned directly to the government to support its short-term needs. This suggests that the Ghanaian government may have borrowed the funds from the central bank to finance its budget or other obligations.
Overall, the issuance and auction of BoG bills is an essential monetary policy tool for the Bank of Ghana. The auction outcome reflects the central bank’s ability to attract funding from the domestic financial market and support its monetary policy objectives. As the central bank continues to navigate a challenging economic environment, the effectiveness of its monetary policy tools will remain critical to achieving its objectives of maintaining price stability and promoting economic growth.
Norvanreport