(3 Minutes Read)
A Financial Stability Committee will be established to assess risks to the financial system and propose macro and micro-prudential policies. The Board will decide on policies such as crisis management tools and the lender-of-last-resort mechanism based on committee recommendations.
The National Bank of Ethiopia (NBE) is set to undergo significant institutional reorganization as the country moves toward a more liberalized financial system. Two key proclamations—the NBE establishment proclamation and the banking business proclamation—are expected to be finalized in the coming weeks, marking a turning point for Ethiopia’s banking sector.
During recent parliamentary sessions, NBE Governor Mamo Esmelealem Mihretu outlined plans to modernize the regulatory body. Under the new NBE proclamation, a seven-member monetary policy committee will be formed to recommend monetary policies, including setting the National Bank Rate. This committee will include two external experts nominated by the NBE Board and will meet bi-monthly.
Additionally, a Financial Stability Committee will be established to assess risks to the financial system and propose macro and micro-prudential policies. The Board will decide on policies such as crisis management tools and the lender-of-last-resort mechanism based on committee recommendations.
Read Also:
The banking business proclamation aims to open Ethiopia’s financial sector to international banks while protecting local institutions. Governor Mamo emphasised that liberalisation does not equate to deregulation.
Ethiopian-born foreign nationals will also gain investment opportunities under the draft law, with flexible options for using local or foreign currency.
