ACCRA– The Bank of Ghana will begin to implement the Deposit Insurance Scheme in the second quarter of 2018, says the central bank’s governor, Dr Ernest Addiso.

Parliament in 2016 passed the Deposit Protection Act, which seeks to establish a deposit insurance scheme to protect depositors in the event of failure of a bank. The scheme, among other things, seeks to safeguard the savings of individual depositors to build trust in the formal banking system and to contribute to the stabilisation and development of the financial system in Ghana.

Dr Addison made the announcement when addressing the first Graphic Business/Stanbic Bank breakfast meeting of 2018 here Tuesday. The event was held under the theme, Deposit insurance: A catalyst for a stronger banking industry.

The Governor said the idea of the scheme is to have an additional layer of protection in addition to what the central bank normally does to protect and provide enough oversight over the financial sector.

He said the country could have the most prudent application of banking rules, have the most effective oversight over the financial sector but then you also need that deposit insurance scheme to provide the added safety net to boost confidence in the financial sector, especially the small depositors”.

This was the reason why the BoG raised the capital requirements of banks, he said, adding that, all things being equal, we expect that in a strong and well-capitalised bank, the sector will be well positioned to offer safer services.

He said there were arguments about the new capital requirement and that foreign ownership of banks were more dominant, but the data at the Central Bank did not suggest that control in the banking sector.

The Governor said the Central Bank wants to see a country which is economically diversified and which can have a financial sector which will assist in structural transformation.