Ghana’s banking sector is entering the final stretch of 2025 with noticeably tighter pockets, as new monetary data shows bank reserves continuing to shrink and overall liquidity in the economy falling sharply. While the squeeze is clearly part of the broader push to tame inflation, it is also raising questions about whether the country is drifting into a period of weaker spending momentum and slower economic energy.
The numbers tell the story more plainly than anything else. Bank reserves, a major component of Reserve Money, have been negative for most of 2025, signalling that banks are operating with far less free cash than a year ago. From –11.0% in June, reserves briefly recovered in July but fell again to –3.0% in August, –13.4% in September, and –6.5% in October. The trend is unmistakable: banks are running on leaner cash balances.
At the same time, total liquidity in the economy, measured by M2+, has been losing strength month after month. From a 31.7% growth in March, liquidity slumped to 18.1% in May, 15.6% in June, 16.6% in August, and finally just 8.2% in October. This is one of the steepest slowdowns in recent times, and it reflects exactly what it looks like: cash flowing through the system is tightening.
Even the movement of physical cash tells a similar story. Currency outside banks, which was extremely high through 2024, has fallen substantially during 2025. There is a mild pickup in October, rising slightly from 13.9% to 14.4%, but the levels remain well below last year’s. The message is that households and businesses are still spending cautiously, with only a small return to cash-based transactions.
The Bank of Ghana appears to be holding the line on liquidity in an effort to keep inflation on a downward path. A tighter system typically slows price pressures by cooling demand, reducing excess cash, and moderating lending growth. In that sense, the strategy is working as intended.
But the broader question is what this means for the pace of economic activity. With bank reserves shrinking, liquidity growth slowing, and money supply indicators decelerating almost across the board, there are signs that the real economy may be losing some momentum as 2025 winds down. For now, the central bank seems comfortable keeping the valves tight.
