Addis Abeba – The National Bank of Ethiopia (NBE) launched an online interbank money market platform on 31 October, 2024, allowing commercial banks to conduct short-term borrowing and lending transactions.
The platform, operating through the Ethiopian Securities Exchange (ESX), facilitates one-day and seven-day lending operations between banks, according to an NBE statement.
“This initiative marks a significant step towards enhancing liquidity management in the banking sector and promoting financial stability,” the NBE stated.
The central bank has established specific parameters for the platform’s operation. Commercial banks must conduct trades within an interest rate corridor based on the National Bank Rate (NBR), with an upper limit of NBR+3% and a lower limit of NBR-3%.
In July, as part of modernizing its monetary policy framework, the NBE set the National Bank Rate (NBR) at 15%, which serves as the rate at which commercial banks can borrow from the central bank.
“The NBE will intervene using liquidity management instruments to ensure that the interbank interest rate converges to the NBR if rates deviate from expected levels,” the statement indicated.
The platform will operate under the NBE’s Interbank Money Market Directive and Code of Conduct, with participation limited to NBE-approved commercial banks.
The initiative is part of the NBE’s broader transition toward an interest-rate-based monetary policy framework, aligning with international banking practices. The central bank states that the new system aims to strengthen liquidity management, reduce systemic risk, and support monetary policy implementation. AS
