a. Financial intermediation involves institutions like banks channeling funds from savers to borrowers, enhancing economic efficiency. Main benefits include:

• Maturity Transformation: Banks convert short-term deposits into long-term loans, enabling projects like infrastructure in Ghana (e.g., Ecobank financing road projects), while managing liquidity risks per BoG’s Liquidity Risk Management Guidelines (2019).
• Risk Reduction: Diversification and credit assessment reduce risks for savers; banks use tools like credit scoring to mitigate default, aligned with Basel II/III principles in Ghana’s CRD.
• Liquidity Provision: Savers access funds on demand, while borrowers get stable financing; this supported Ghana’s economy during the 2017-2019 cleanup, where recapitalized banks like Access Bank boosted lending.
• Information Asymmetry Mitigation: Banks screen and monitor borrowers, reducing adverse selection and moral hazard; in Ghana, this is enforced via BoG’s Corporate Governance Directive (2018), preventing issues like those in UT Bank’s collapse.
• Economies of Scale: Lower transaction costs through bulk processing; e.g., Stanbic Bank’s digital platforms reduce costs under the Payment Systems Act (Act 987).
• Payment System Efficiency: Facilitates smooth transactions via cheques, transfers, and mobile money (e.g., MTN MoMo integrations), boosting GDP growth.
• Capital Allocation: Directs funds to productive sectors, supporting Ghana’s Vision 2057 agenda.
• Interest Rate Smoothing: Stabilizes rates, aiding monetary policy transmission.
• Financial Inclusion: Expands access for underserved groups, as per BoG’s Sustainable Banking Principles (2019).
• Innovation and Growth: Enables fintech collaborations, reducing costs (e.g., post-DDEP recovery via digital lending).
• Shock Absorption: Acts as buffer during crises, like BoG’s support in 2020 COVID-19 response.
• Regulatory Compliance: Ensures adherence to laws, preventing systemic risks.
• Profit Generation: For institutions, via spreads, sustaining operations.
• Economic Multiplier: Increases money velocity, per quantity theory applications.
• Global Integration: Facilitates forex dealings, aiding Ghana’s trade.

In practice, Ghana’s intermediation has evolved post-2019 cleanup, with banks like GCB focusing on resilient models.

b. This rumor suggests indirect central bank financing of government via banks, potentially circumventing direct lending caps under the BoG Act (Section 46, limiting government borrowing to 10% of previous revenue). Assessment: It’s plausible but risky and non-transparent. Direct BoG lending to government is capped to avoid inflation (as in 1980s episodes), but lending to banks (via OMOs or discount window) is standard for liquidity. If banks then buy T-bills (at 13% yield vs. 25% MPR), it creates arbitrage but could fuel moral hazard and inflation if excessive. In Ghana’s context, post-DDEP (2022-2024), BoG provided liquidity to banks via haircuts and bonds, indirectly supporting government; however, this rumor implies evasion of scrutiny, violating transparency under BoG’s governance. I’d recommend verifying via BoG audits or MPC minutes—it’s not ideal, as it distorts markets and erodes trust, similar to critiques during the 2022 fiscal crisis.