| Mission Statement |
| The National Bank of Ethiopia being the central bank of
the country, plays a key role in the Ethiopian economy by formulating and implementing the
country's monetary policy. |
| The Evolution of National Bank of
Ethiopia |
The National Bank
of Ethiopia was established in 1963 by proclamation 206 of 1963 and began operation in
January 1964. Prior to this proclamation, the Bank used to carry out dual activities, i.e.
commercial banking and central banking. The proclamation raised the Bank's capital to
Ethiopian dollars 10.0 million and granted broad administrative autonomy and juridical
personality. Following the proclamation the National Bank of Ethiopia was entrusted with
the following responsibilities.
To regulate the supply, availability and cost of money and credit.
To manage and administer the country's international reserves.
To license and supervise banks and hold commercial banks reserves and
lend money to them.
To supervise loans of commercial banks and regulate interest rates.
To issue paper money and coins.
To act as an agent of the Government.
To fix and control the foreign exchange rates.
However, monetary and banking proclamation No. 99 of 1976 came into
force on September 1976 to shape the Bank's role a According to the socialist economic Principle that the country adopted. Hence the Bank was allowed to participate actively in
national planning, specifically financial planning, in cooperation with the concerned
state organs. The Bank's supervisory area was also increased to include other financial
institutions such as insurance institutions, credit cooperatives and investment-oriented
banks. Moreover the proclamation introduced the new Ethiopian Currency called 'birr' in
place of the former Ethiopia Dollar that eased to be legal tender thereafter.
The proclamation revised the Bank's relationship with Government. It
initially raised the legal limits of outstanding government domestic borrowing to 25% of
the actual ordinary revenue of the government during the proceeding three budget years as
against the proclamation 206/1963, which set it to be 15%.
This proclamation was in force till the new proclamation issued in 1994
to reorganize the Bank according to the market-based economi policy so that it could
foster monetary stability, a sound financial system and such other credit and exchange
conditions as are conducive to the balanced growth of the economy of the country.
Accordingly the following are some of the powers and duties vested in the Bank by
proclamation 83/1994.
Regulate the supply and availability of money & credit and
applicable interest and other hanges.
Set limits on gold and foreign exchange assets which banks and other
financial institutions authorized to deal in foreign exchange an hold in deposits.
Set limits on the net foreign exchange position and on the terms and
amount of external indebtedness of banks and other financial institutions.
Make short and long-term refinancing fa ilities available to banks and
other finan ial institutions.
Moreover, the proclamation has also raised the paid-up capital of the Bank
from Birr 30.0 million to Birr 50.0 million. |
| Objectives of the Bank |
- To foster monetary stability and a
sound financial system.
To ensure that credit and exchange conditions are
conducive to the balanced growth of the economy of Ethiopia.
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| Powers & Duties of NBE |
To accomplish these
objectives, the Bank has the following powers and duties:
Coins, prints and issues the legal tender currency, and regulates the
country's money supply.
Regulates the applicable interest rate and other cost of money charges.
Formulating implements and follows-up the country's exchange rate
policy, and manages and administers the international reserves of the country.
Licenses, supervises and regulates the operations of banks, insurance
companies and other financial institutions.
Sets limits on gold and foreign exchange assets, which banks, and other
financial institutions authorized to deal in foreign exchange an hold in deposits.
Sets limits on the net foreign exchange positions and terms, and the
amount of external indebtedness of banks and other financial institutions.
Provides short and long term refinancing fa ilities to banks and other
financial institutions.
Accepts deposit of any kind from foreign sources.
Promotes and encourages the dissemination of banking and insurance servi
es throughout the country.
Prepares periodic ecnomic studies, together with forecasts of the
balance of payments, money supply, prices and other relevant statistical indicators of the
Ethiopian economy useful for analysis and for the formulation and determination by the
Bank of monetary, saving and exchange policies.
Acts as banker, fiscal agent and financial advisor to the Government.
Represents the country in international monetary institutions and acts
consistently with international monetary and banking agreements to which Ethiopia is a
party.
Exercises and performs such other powers and activities as central banks
customarily perform.
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