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5 Shocking Reforms By The National Bank Of Ethiopia (NBE) That Are Changing Finance In 2025

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The National Bank of Ethiopia (NBE) is currently navigating one of the most transformative periods in the nation's financial history, marked by a series of aggressive and far-reaching reforms throughout 2025. These pivotal changes are not merely administrative; they are fundamentally reshaping the banking sector, modernizing capital markets, and addressing persistent macroeconomic challenges like inflation and foreign exchange shortages. As of December 2025, the central bank's focus is clearly on enhancing institutional independence, strengthening bank resilience, and accelerating the transition to a modern, digital-first economy.

The NBE's strategy, driven by a new proclamation and a commitment to economic liberalization, has introduced critical new directives on risk management, capital adequacy, and digital infrastructure. From launching the country's first Central Securities Depository to tightening controls on illegal remittances, the central bank is asserting its role as the primary architect of Ethiopia's financial future, making this a crucial moment for investors, commercial banks, and the public alike.

The Architect of Reform: Governor Mamo Mihretu's Biography and Profile

The ambitious reform agenda at the National Bank of Ethiopia is spearheaded by its current Governor, Mamo Esmelealem Mihretu.

Full Name: Mamo Esmelealem Mihretu (Amharic: ማሞ እስመላለም ምህረቱ)

  • Current Position: 10th Governor of the National Bank of Ethiopia (NBE).
  • Appointment Date: January 2023.
  • Background: Distinguished Ethiopian lawyer, economist, and policymaker.
  • Prior Role: Before his appointment as Governor, Mamo Mihretu served as a Senior Economic Adviser to Ethiopian Prime Minister Abiy Ahmed.
  • Key Focus: He is widely recognized as a "reformist" central bank governor, driving a comprehensive economic transformation agenda that includes monetary policy adjustments, foreign exchange regime liberalization, and the modernization of the financial sector.
  • International Engagement: In 2025, he was a key figure at the IMF-World Bank Spring Meetings, where he discussed Ethiopia’s transformative economic reforms.

1. Macroeconomic Tightening: Latest Inflation and Exchange Rate Data (2025)

A primary challenge for the NBE in 2025 remains the stabilization of the macroeconomic environment, particularly taming persistent inflation and managing the volatile foreign exchange market. The NBE has implemented major reforms in both monetary policy and foreign exchange management to address these issues.

The Battle Against Inflation: A 10.9% Target

The central bank’s efforts to control the rising cost of living have shown recent, albeit cautious, success. The annual headline inflation rate in Ethiopia eased further to 10.9% in November 2025. This figure represents the lowest inflation rate recorded since February 2019, down from 11.7% in the previous month. The deceleration is a positive sign, although the NBE continues to face pressure to maintain this downward trend, especially concerning food inflation, which remains a key component of the overall index.

The Evolving Birr Exchange Regime

Managing the Ethiopian Birr (ETB) against major foreign currencies, particularly the US Dollar (USD), is another critical area of reform. The NBE announced a significant reform of the foreign exchange regime in 2024, which continues to shape the market in 2025. The official indicative daily exchange rate for the ETB per USD was approximately 154.989 to 155.2687 as of December 2025. This figure reflects the ongoing, managed depreciation as the NBE aims to unify the exchange rate and enhance the independence of its monetary policy framework. Furthermore, the NBE has intensified actions against illegal remittance practices to channel more foreign currency through official banking channels.

2. The Digital Leap: Launch of the Ts'ega CSD and CBDC Exploration

The National Bank of Ethiopia is aggressively pushing for the digitalization and formalization of the financial sector, a key pillar of its economic transformation strategy. This push is evident in two major initiatives: the launch of the Central Securities Depository (CSD) and the ongoing review of a Central Bank Digital Currency (CBDC).

Ts'ega: Ethiopia's Central Securities Depository (CSD)

In a landmark move for the country's capital markets, the NBE officially launched Ethiopia's first full-fledged Central Securities Depository (CSD) system and the national investor portal called "Ts'ega" in November 2025. The CSD is a robust, automated platform designed to provide secure and efficient primary market post-trade services. The launch of Ts'ega is a major advancement in Ethiopia's efforts to build a transparent, efficient, and fully digital capital market, allowing investors to view their securities information easily.

The CBDC and Digital Payments Strategy

While the NBE has strictly maintained that the use of decentralized digital currencies like cryptocurrencies for transactions is illegal, warning violators of strict legal action, it is actively exploring its own digital future. Ethiopia's new National Bank Proclamation (2025) grants the NBE the authority to issue and regulate a Central Bank Digital Currency (CBDC). The NBE is currently reviewing various CBDC options as part of its updated National Digital Payments Strategy (NDPS), aiming to accelerate the transition to a modern, interoperable, and increasingly cash-lite economy.

3. Strengthening the Banking Sector: New Risk-Based Directives (2025)

To ensure the stability and resilience of the commercial banking sector, the National Bank of Ethiopia introduced a suite of new, stringent directives in 2025. These regulatory frameworks are designed to align Ethiopian banks with international best practices, particularly regarding capital adequacy and risk management.

  • Risk-Based Capital Adequacy (Directive No. SBB/95/2025): This is a major regulatory shift, introducing a fully risk-based capital adequacy framework for all Ethiopian banks. The directive sets a 2026 deadline for banks to comply, forcing them to hold capital proportional to the risks they undertake, thereby strengthening their financial buffers.
  • Recovery Planning (Directive No. SBB/93/2025): The NBE has mandated recovery planning, requiring banks to develop strategies for self-reliance and resilience in the face of severe financial stress. This pivotal step is aimed at preventing systemic crises and ensuring the continuity of essential banking services.
  • Foreign Exchange Exposure Limits (Directive No. SBB/96/2025): This directive tightens the monitoring and control of foreign exchange exposure for commercial banks, a critical measure given the country's chronic FX shortage.
  • Digital ID Link Mandate: In a move to enhance security and financial inclusion, the NBE has made it mandatory for bank customers to link their accounts to a valid digital ID.

These directives, alongside the NBE's commitment to joining the Global Green Finance Network, demonstrate a comprehensive effort to build a robust, secure, and internationally compliant financial ecosystem.

national bank of ethiopia
national bank of ethiopia

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