National Bank of Ethiopia
Encyclopedia
The National Bank of Ethiopia is the central bank
of Ethiopia
. Its headquarters are in the capital city of Addis Ababa
. The bank's name is abbreviated to NBE.
which reached Addis Ababa in 1917. In 1931, Emperor Haile Selassie introduced reforms into the banking system and the Bank of Abyssinia became the Bank of Ethiopia, a fully government-owned bank providing central and commercial banking services. The Italian invasion
in 1935 brought the demise of one of the earliest initiatives in African banking. During the Italian occupation, Italian banks were active in Ethiopia.
On April 15, 1943, the State Bank of Ethiopia became the central bank and was active until 1963.
The National Bank of Ethiopia was established in 1963 by Proclamation 206 of 1963 and began operation in January 1964. The establishment of the new organization was aided by U.S Department of State emissary, Earle O. Latham
, who was the first Vice President of the Federal Reserve Bank of Boston
.
Prior to this proclamation, the Bank carried out dual activities, i.e. commercial banking and central banking. The proclamation raised the Bank's capital to 10 million Ethiopian dollars and granted broad administrative autonomy and juridical personality. Following the proclamation the National Bank of Ethiopia was entrusted with the following responsibilities:
However, monetary and banking proclamation No. 99 of 1976 came into force on September 1976 to shape the Bank's role 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 birr
' in place of the former Ethiopian Dollar that ceased to be legal tender
.
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 economic policy so that it could foster monetary stability, a sound financial system and such other credit and exchange conditions as are conductive 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.
Lastly, the proclamation has also raised the paid-up capital of the Bank from Birr
30.0 million to Birr 50.0 million.
Central bank
A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...
of Ethiopia
Ethiopia
Ethiopia , officially known as the Federal Democratic Republic of Ethiopia, is a country located in the Horn of Africa. It is the second-most populous nation in Africa, with over 82 million inhabitants, and the tenth-largest by area, occupying 1,100,000 km2...
. Its headquarters are in the capital city of Addis Ababa
Addis Ababa
Addis Ababa is the capital city of Ethiopia...
. The bank's name is abbreviated to NBE.
History
February 15, 1906 marked the beginning of banking in Ethiopia when the first Bank of Abyssinia was inaugurated by Emperor Menelik II. It was a private bank whose shares were sold in Addis Ababa, New York, Paris, London, and Vienna. One of the first projects financed by the bank was the Franco-Ethiopian RailwayImperial Railway Company of Ethiopia
Rail transport in Ethiopia currently consists only of a line from Djibouti to Dire Dawa. The line continues from Dire Dawa to Addis Ababa, but is no longer operational...
which reached Addis Ababa in 1917. In 1931, Emperor Haile Selassie introduced reforms into the banking system and the Bank of Abyssinia became the Bank of Ethiopia, a fully government-owned bank providing central and commercial banking services. The Italian invasion
Second Italo-Abyssinian War
The Second Italo–Abyssinian War was a colonial war that started in October 1935 and ended in May 1936. The war was fought between the armed forces of the Kingdom of Italy and the armed forces of the Ethiopian Empire...
in 1935 brought the demise of one of the earliest initiatives in African banking. During the Italian occupation, Italian banks were active in Ethiopia.
On April 15, 1943, the State Bank of Ethiopia became the central bank and was active until 1963.
The National Bank of Ethiopia was established in 1963 by Proclamation 206 of 1963 and began operation in January 1964. The establishment of the new organization was aided by U.S Department of State emissary, Earle O. Latham
Earle O. Latham
Earle O. Latham was born in Lowell, Massachusetts. He attended Boston University, Rutgers University School of Banking and Columbia University Graduate School of Management. During 46 years of employment, Latham rose from a messenger to serve as the First Vice President of the Federal Reserve Bank...
, who was the first Vice President of the Federal Reserve Bank of Boston
Federal Reserve Bank of Boston
The Federal Reserve Bank of Boston, commonly known as the Boston Fed, is responsible for the First District of the Federal Reserve, which covers most of Connecticut , Massachusetts, Maine, New Hampshire, Rhode Island and Vermont. It is headquartered in the Federal Reserve Bank Building in Boston,...
.
Prior to this proclamation, the Bank carried out dual activities, i.e. commercial banking and central banking. The proclamation raised the Bank's capital to 10 million Ethiopian dollars 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 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 birr
Ethiopian birr
The birr is the unit of currency in Ethiopia. Before 1976, dollar was the official English translation of birr. Today, it is officially birr in English as well....
' in place of the former Ethiopian Dollar that ceased to be legal tender
Legal tender
Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency is a common form of legal tender in many countries....
.
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 economic policy so that it could foster monetary stability, a sound financial system and such other credit and exchange conditions as are conductive 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 and 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 and 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 facilities available to banks and other financial institutions.
Lastly, the proclamation has also raised the paid-up capital of the Bank from Birr
Ethiopian birr
The birr is the unit of currency in Ethiopia. Before 1976, dollar was the official English translation of birr. Today, it is officially birr in English as well....
30.0 million to Birr 50.0 million.