Improved liquidity could see FSF support banks recapitalisation efforts

Dr. Richmond Atuahene, a banking consultant, has suggested that the GH¢15billion Financial Stability Fund (FSF) – which was set up to provide liquidity support to the banking sector following the Domestic Debt Exchange Programme (DDEP) – can instead be channeled to support banks’ recapitalisation, especially locally-owned banks. He said due to excess post-DDEP liquidity and information asymmetry in the banking system, banks may not be as severely constrained as they would otherwise have been; therefore they may not require significant liquidity support from the FSF. Citing the example of Jamaica, he said: “… the establishment of a Jamaican Financial Sector…