Ghanaians are increasingly moving away from cash-based transactions in favor of formal banking channels, according to the Bank of Ghana’s April 2025 monetary summary. Currency outside banks declined sharply to 20.0% in April, marking the lowest level in over a year and continuing a clear downward trend that began after peaking at 38.1% in October 2024.
This significant drop in cash holdings coincides with a broader slowdown in Reserve Money (RM) growth, which also fell to 38.0% in April, its lowest since early 2024, down from a high of over 104% just six months earlier. The trend indicates a tightening of liquidity conditions and a cooling in monetary expansion, signaling more prudent financial management and growing confidence in Ghana’s formal banking system.
Trend Analysis: A Structural Shift in Financial Behavior
Between April 2024 and April 2025, currency outside banks steadily declined despite short-term fluctuations, suggesting a structural shift in consumer and business behavior. The sharpest reversals occurred post-October 2024, when both RM growth and cash circulation began falling in tandem.
- Currency Outside Banks fell from 38.1% (Oct 2024) → 20.0% (Apr 2025)
- Reserve Money Growth dropped from 104.5% (Oct 2024) → 38.0% (Apr 2025)
- Bank Reserves also declined significantly from 64.2% in October to just 16.8% in April 2025
These figures suggest that banks are holding fewer reserves, possibly due to tighter central bank policies or reduced liquidity demand, while households and businesses increasingly prefer bank accounts and digital wallets over physical cash.
What’s Happening with Non-Bank Deposits?
Interestingly, non-bank deposits have remained relatively flat, fluctuating within a narrow range and falling to just 1.2% growth in April 2025, from a modest peak of 3.2% in July 2024. This could indicate a sluggish appetite for savings outside the core banking system, possibly due to low interest rates or limited alternatives for safe and attractive non-bank investments.
Implications: Monetary Control, Digital Growth, and Trust
The combined fall in currency outside banks and reserve money growth gives the central bank greater control over inflation and liquidity, making monetary policy more effective. At the same time, it reflects a growing embrace of financial digitization, where people are more comfortable using mobile money, bank apps, and digital payment platforms.
This shift also signals a restoration of trust in the banking system, following years of sector clean-ups and reforms. As fewer people hold physical cash, financial flows become more transparent, contributing to formal economic activity and tax compliance.
