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Central Bank Doubles Reserve Requirements

August 31 , 2021

Commercial banks are now obliged to place 10pc of their net deposits as a reserve with the National Bank of Ethiopia (NBE), double the amount the central bank has been holding.

Effective tomorrow, September 1, 2021, the latest move targets reducing money circulating in the market and taming the growing inflationary pressure, where headline inflation hit 26.4pc last month.

The interest rate levied on commercial banks on loans from the central bank has also been raised by three percentage points to 16pc.

One thought on “Central Bank Doubles Reserve Requirements

  1. It is tight measure for private commercial banks i.e. they should work aggressively on deposit mobilization from the public.
    It leads to tight competition among banks especially in large towns.
    Due to huge gap between saving interest rate (7%) and inflation of 26.4%,savers in the bank are hesitated to deposit their money.

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