Friday, July 19, 2024
HomeLaw & PoliticsEthiopia Prepares Legal Framework for CBDC as Part of Major Economic Reforms

Ethiopia Prepares Legal Framework for CBDC as Part of Major Economic Reforms

The NBE has prepared two significant proclamations as part of an economic reform plan. These include creating a legal framework for the potential introduction of a central bank digital currency (CBDC), enhancing the NBE’s capital, establishing a legal basis for consumer protection, liberalizing foreign investment in the banking sector, addressing issues with problem banks, and creating a regulatory sandbox to test innovative financial solutions.

The Council of Ministers has already approved these proclamations, which are set to be introduced into the House of Representatives soon. Specific timelines for the implementation of these reforms, such as the study on CBDCs, are expected to begin in June, and plans to join the Cross Border Payment System are scheduled for December.

This initiative is taking place in Ethiopia, which is part of a broader effort to liberalize and modernize the country’s economic and financial systems.

The proclamations by the NBE are aimed at reforming and strengthening Ethiopia’s financial sector by introducing modern regulatory frameworks and encouraging foreign investment. These measures are expected to facilitate greater financial inclusion and innovation within the country. The proposal to introduce a CBDC is part of Ethiopia’s Homegrown Economic Reform Agenda and is intended to enhance the efficiency of the payment system and to integrate more of the population into the formal banking system.

Ethiopia is undergoing significant economic reforms to liberalize its economy, including the end of the state monopoly on mobile money services and the utilization of blockchain technology for major government payments. Crypto adoption across Africa varies, with some countries like Nigeria and Zimbabwe exploring or implementing their own versions of CBDCs, while others face challenges due to infrastructure limitations. Ethiopia’s move towards studying and potentially introducing a CBDC comes as part of a broader trend across Africa and globally, where nations are increasingly considering digital currencies as a solution to improve economic systems and increase financial accessibility.



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