The National Bank of Ethiopia (NBE) is Ethiopia's central bank. It plays a central role in the economy and the financial system.
History
The NBE was established in 1963, replacing the State Bank of Ethiopia. It has evolved through Ethiopia's economic and political changes.
Core Functions
1. Issuing Currency
The NBE is the sole issuer of birr banknotes and coins. It ensures adequate supply and works to prevent counterfeiting.
2. Monetary Policy
The NBE sets the policy (benchmark) interest rate and uses other tools to influence:
- Inflation
- Economic growth
- The exchange rate
Tools include reserve requirements, open market operations, and moral suasion.
3. Regulating Banks
The NBE licenses and supervises commercial banks, microfinance institutions, and other financial entities. It sets capital requirements, prudential rules, and conducts inspections.
4. Managing Foreign Exchange
The NBE holds foreign exchange reserves and manages the exchange rate regime. It sets the reference rate and may intervene in the market. It also regulates how banks and bureaus deal in foreign currency.
5. Banker to the Government
The NBE acts as the government's banker, managing its accounts and facilitating debt issuance.
How It Affects You
- Interest rates: NBE policy influences what you earn on deposits and pay on loans
- Exchange rates: The reference rate and interventions affect how much birr you get for dollars or euros
- Bank safety: NBE supervision helps keep the banking system stable
Transparency
The NBE publishes reports, circulars, and statistics. For the latest on monetary policy and regulations, visit the NBE website.