The National Bank of Ethiopia (NBE) has launched an electronic money market trading platform to allow for interbank lending, the apex bank said on Thursday.
- The system will be administered by the Ethiopian Securities Exchange (ESX).
- It will facilitate short term lending and borrowing among banks to improve liquidity.
- Rates will be limited to the NBE’s +/-3% corridor of the National Bank Rate (NBR).
“This initiative enables banks to manage liquidity more efficiently within the banking system while allowing the NBE to influence short-term interest rates,” NBE said in a statement.
The interbank lending platform is the latest in a series of fiscal and monetary policies by the country’s central bank, as it moves to reform the financial sector as part of broader economic reforms. In mid-October, the NBE outlined additional measures to fix issues in the foreign exchange market after it liberalised the crucial market in July.
The measures include a 2 percent limit and transparency in the foreign exchange trade, including of fees and commissions. It had previously sold $175mn in the FX market, and licensed five forex bureaus. In July, the Council of Ministers in the country approved two draft proclamations that will allow foreign banks to invest in Ethiopia’s banking sector.
