The ability of the Central Bank to monitor in real time forex transactions, could potentially slow down black market activity, if the directive is enforced properly.
The Bank of Ghana’s new directive requiring forex bureaux to use a centralized foreign exchange platform begins today, sparking mixed reactions from the public.
The directive aligns with practices in several countries across Africa, Europe, and North America.
Opinions are divided: some see the directive as a positive step, while others doubt its effectiveness. If enforced, the directive will enable the Central Bank to access real-time information on forex transactions, allowing for timely interventions to address any arising challenges. This could also curb arbitrary pricing of the dollar, as forex bureaux, aware of being monitored, would need to justify any unusual pricing.
Additionally, the directive aims to reduce black market activities. While there are concerns that it might push people towards the black market to evade regulatory scrutiny, the opposite might occur. Market analysts suggest that with a centralized trading platform and mandatory biometric verification for all customers, the Central Bank will be able to trace most forex transactions. Moving foreign currency out of the banking system or forex bureaux to sell on the black market would become more difficult, as the Central Bank could track or suspect such illicit activities.
Although people might initially turn to the black market, sustained enforcement of the directive could eventually make it harder to transfer forex between the banking system and the black market due to traceability, potentially slowing down black-market activities.
However, there is skepticism about the directive’s success, especially with suspicions that influential individuals are the primary suppliers of foreign currency to black market operators. Forex bureaux operators have also expressed resistance to the measures and are seeking to push back. The lack of public education on the benefits of the directive further raises concerns that these measures might become as ineffective as previous ones.
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Sources indicate that a major reason for the directive, particularly the clause stating that only licensed dealers can sell forex, is to provide legal grounds for the arrest and prosecution of black-market operators.
Previously, the Central Bank and security agencies struggled to prosecute individuals arrested for illegal forex trading due to unclear regulations. The new directive aims to provide sufficient legal backing to successfully prosecute black market operators.
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Despite the announcement of this directive, the cedi continued to depreciate due to an inadequate supply of dollars, leading many to doubt whether the new measures will stabilize the local currency unless sufficient dollars are made available to meet the demand.
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