HistoryBrief Historical Background
The Central Bank of Ghana traces its roots to the Bank of the Gold Coast (BCG), where it was nurtured. As soon as local politicians and economists saw political independence in sight in the mid 1950’s the agitation for a central bank was revived. It was argued that a central bank was one institution which would give true meaning to political independence. It may be recalled that way back in 1947 some leading politicians had called for the establishment of a national bank with central bank functions to act as banker to government and to cater for the indigenous sector of the economy.
Proposals of the advocates for a central bank were accepted and in early 1955 another Select Committee was set up by the Government to take a new look at the Trevor Report and prepare the grounds for the establishment of a central bank in Ghana. Fortunately, the BGC had already set the stage for central banking: all that was needed was specially trained personnel in central banking and suitable accommodation for the bank to take off.
By the end of 1956, all was set for the establishment of the Bank of Ghana. A new and modern five-storey building had been put up on the High Street, adjacent to the Accra Metropolitan Assembly (AMA) to house both the Bank of Ghana and the Ghana Commercial Bank (GCB).
The Establishment of Bank of Ghana, 1957
On the 4th March 1957, just two days before the declaration of political independence, the Bank of Ghana was formally established by the Bank of Ghana Ordinance (No. 34) of 1957, passed by the British Parliament. Frantic preparations then began to put in place an organisational structure for the new central bank. By the middle of July 1957, all was set for the official commissioning of the new Head Office of the Bank on the High Street.
In his opening address at the end of July 1957, the then Leader of Government Business (Prime Minister) stated with pleasure that the occasion marked the beginning of independent monetary administration in the newly independent Ghana – a cherished dream had at long last become a reality. The Leader of Government Business had put the aspiration of the country in establishing the central bank as follows: “In the modern world a central bank plays a very important and decisive role in the life of a country. It is essential to our own independence that we have a government-owned bank and that the central bank follows a policy designed to secure our economic independence and to further the general development of our country.”
The principal objects of the new central bank, as enshrined in the 1957 Ordinance, were “to issue and redeem bank notes and coins: to keep and use reserves and to influence the credit situation with a view to maintaining monetary stability in Ghana and the external value of the Ghana pound; and to act as banker and financial adviser to the Government.
The opening ceremony paved the way for the Bank to commence formal banking operations on 1st August 1957, when the Banking Department opened for business. The Issue Department did not commence operations until July 1958.
The [Bank of Ghana] has since 1957 undergone various legislative changes. The Bank of Ghana Ordinance (No.34) of 1957 was repealed by the Bank of Ghana Act (1963), Act 182. This Act was subsequently amended by the Bank of Ghana (Amendment Act) 1965, (Act 282).The Bank of Ghana Law, 1992 PNDCL 291 repealed Acts 182 and 282.
The current law under which the Bank operates is the Bank of Ghana Act, 2002 (Act 612)
The first Governor of the Bank was Mr. Alfred Eggleston, the former Managing Director of BGC and an accomplished Scottish banker on secondment to Ghana from the Imperial Bank of India. His Deputy Governor was one Mr. Douglas F. Stone, another renowned British central banker also on secondment from Bank of England.
The general administration of the Bank was entrusted in the hands of a seven-member board of directors under the Chairmanship of the Governor.
The first Board was as follows:
1. Alfred Eggleston Chairman
2. Douglas F. Stone Deputy Governor
3. R. S. Blay Director
4. Dr. N. T. Clerk Director
5. C. E. Osei Director
6. R. C. Parkin Director
7. Albert Adomako Secretary
The Governor of the Bank and his Deputy were appointed by the Governor of the Gold Coast on the recommendation of the Prime Minister, in accordance with Section 10(1) of the 1957 Ordinance. The Governor and his Deputy were each appointed for a term of five years and were eligible for reappointment. Those two officials were answerable to the Board for their acts and decisions in the course of general administration of the affairs of the Bank. The Board itself was also answerable to the Ministry of Finance for efficient management of the Bank. The other directors of the Board were also appointed by the Prime Minister with the approval of the Governor of the Gold Coast for a term of three years, subject to renewal.
The Bank commenced business with six main departments namely:
• The Governors’ Office
• The Administration/Personnel Department
• The Banking Department
• The Issue Department
• Accounts/Audit Department
• Economics/Statistics Department
The Governors’ Office was headed by the Secretary to the Board while the other departments were headed by Managers who reported directly to the Deputy Governor or, in special cases to the Governor. The departments were run by the managers in accordance with policies and decisions arrived at by an in-house Management accordance with policies arrived at by an in-house Management Committee comprising the Governor, the Deputy Governor and three or four heads of department appointed by the Governor.
With that initial organisational arrangements, the Bank of Ghana assumed its central role in the banking system of Ghana, which then comprised the central bank, two expatriate commercial banks – the British Bank of West Africa (BBWA) (now Standard Chartered Bank) and Barclays Bank Limited (Dominion, Colonial and Overseas); and the new Ghana Commercial Bank (GCB).
There was also the Post Office Savings Bank (POSB), which was, in fact, not a bank by definition; it was only an institution set up by the government to mobilise public savings through the agency of the numerous post offices in the country, for investment in government paper