NBE to force banks to network

By Binyam Tamene

The National Bank of Ethiopia (NBE) will soon introduce a mandatory networking regulation.

The law would compel the rapidly growing sector to be networked in order to make monitoring for the sector's regulator, the NBE, easy and quick. Among other things, the regulation, which the bank has not yet given an introduction date for, could prohibit the long standing use of manual transactions.

The Monetary and Banking Proclamation of 1994 established the National Bank of Ethiopia as regulator.

Change Management and Communication Directorate Director at the NBE, Alemayehu Kebede, said the banking industry of the country need to work on their networking system soon or they will not survive after its introduction.

Many banks in the country are lagging behind on technology and competition, however, the NBE is rolling out an automatic check clearing and settlement system.

Clearing and settlement is an interbank process, the rules of which are dictated by banking laws and regulations, and whose operational efficiency is determined by the policies and systems of the utilities that operate the networks and clearinghouses through which payments are cleared and settled.

The Communications Office of NBE said regulations could force banks to look into their technologies that build their networking capacity so the NBE can get information easily.

"This is so the central bank can use this information to take measures related to foreign currency and also take policy decisions," Alemayehu explained.

The communications director said through this connection, NBE plans to conduct a gross settlement system and a national clearing and automatic check clearing system.

Source: CapitalEthiopia