Ethiopia Approves CBDC Launch Draft Proclamation

The Ethiopian Council of Ministers recently approved a draft proclamation that paves the way for the launch of a central bank digital currency (CBDC). The National Bank of Ethiopia (NBE) stated that the draft considers rapid technological advancements and draws from the experiences of fellow central banks.

Proclamation Grants Ethiopian Central Bank Authority to Launch CBDC

Ethiopia recently moved closer to launching a CBDC after the Council of Ministers voted to approve a revised draft proclamation. This proclamation establishes a legal framework for the introduction of digital currency. Described as a pivotal step in the race to launch the CBDC, the approval reportedly allows the digital currency to circulate alongside the fiat currency.

According to a local report, the proclamation enables the National Bank of Ethiopia (NBE) to launch the digital currency as and when it deems necessary. The report added that the NBE took into account several factors when drafting the proclamation.

“The National Bank of Ethiopia, NBE, has prepared these proclamations, taking into account the current and future levels of development and policy direction, as well as rapid technological advancements, international principles, and best practices and experiences of peer central banks,” the central bank said.

The report also revealed that the Ethiopian Central Bank plans to launch the CBDC alongside other measures as part of its reform agenda.

Ethiopia to Open Local Banking Sector to Foreign Competition
While the NBE has joined several of its peers in either studying or working toward launching a CBDC, the country’s monetary authorities have previously sought to discourage residents from using or trading cryptocurrencies. To illustrate, a Bitcoin.com News report in June 2022 revealed that the NBE had warned residents against paying for goods and services with cryptocurrency. The bank insisted then that the local currency known as the birr was the only legal tender.

Meanwhile, in addition to the CBDC proclamation, the Council of Ministers also voted to open the local banking sector to foreign competition. After the approval, the two proclamations will be sent to the legislature for review and final ratification.