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The Central Bank on Thursday asked banks to with immediate effect increase their primary reserve ratio by 200 basis point to 11 percent, in a policy move to reduce money-supply in the economy. By the regulators decision, commercial banks are now obliged to retain or deposit 11 percent of their available funds in cash with the Central Bank to act a buffer against any unforeseen circumstances. This comes at a time that inflation rate has increased from 14% in February to 14.5% in March, while the value of the cedi is struggling against the major foreign currencies. According to some bankers, the proportion of money available to them now to lend will therefore go down, amidst businesses� concerns of a credit squeeze in the face of current economic challenges. The CEO of Zenith Bank Ghana, Daniel Aseidu, recently explained to the B&FT that the increase in the primary reserve ratio from the Central Bank�s perspectives is geared toward the general good, even though it will affect the operations of banks. �The more money I have the more lending I do. So from the banking perspective, we would say our liquidity is going to go down; but when you look at the reasons from the Central Bank point of view, the governor says it is in the interest of the people. �The other side is that the more money you have in the system, the more cedis will be chasing the dollar. Yes, I give people money, but since our economy is more import-dependent and people have more money they will want to do more dollar business. If things are working well, fine -- but with the issues we have currently, the rules are not bad. And most of the time these measures are not permanent; you look at the economy and introduce some measures, and then you come back to look at it. �But from a banking perspective it is not too good for us. The more money I have, the more I lend,� he said. The Governor of the central Bank Kofi Wampah explained recently, at the end of its quarterly Monetary Policy Committee meeting in Accra, that the hike in the primary reserve ratio is intended to mop-up excess liquidity in the system while improving the liquidity position of the Central Bank to intervene in the market. �To address the liquidity overhang and improve supply of foreign exchange in the markets, the cash reserve requirement (CRR) of banks has been revised upward to 11 percent from 9.0 percent,� said. Currently, the value of the cedi -- which depreciated by about 17.5% between January and March this year -- is one of the major challenges facing the Ghanaian economy. The Central Bank has since beginning of the year introduced and strengthened its monetary policy rules as well as new directives in the trading of the US dollar, in a bid to curb the fall of the local currency.