ADDIS ABABA, Oct. 3 (Xinhua) -- The National Bank of Ethiopia (NBE) has announced that it has granted licenses to five non-bank companies to operate as Ethiopia's first-ever independent foreign exchange (FX) bureaus.
The move follows the bank's recent major revision of the country's foreign exchange system, which became effective on July 29 this year, introducing a shift to a market-based exchange regime, the NBE said in a statement late Wednesday.
"The NBE welcomes this new chapter in the ongoing liberalization of Ethiopia's financial sector and looks forward to the active growth and expansion of this segment of the foreign exchange market to help address the evolving needs of the Ethiopian economy," the central bank said.
It said that FX bureaus will play a key role in further developing and deepening Ethiopia's foreign exchange market through their involvement in buying and selling cash notes of major convertible currencies.
The NBE said the five companies are granted licenses to operate as independent foreign exchange bureaus in Ethiopia after fulfilling the minimum requirements set by the bank under its foreign exchange directive.
According to the NBE, the independent FX bureaus are only authorized to engage in the buying and selling of cash notes and are not permitted to operate in other segments of the forex market, such as bank-based opening of letters of credit for export or import transactions. The independent FX bureaus will also be limited to spot transactions, with immediate delivery of currencies bought or sold.
The operations of FX bureaus will be strictly monitored and supervised by the NBE to ensure compliance with the roles and responsibilities outlined in its foreign exchange directive. Specifically, these bureaus must meet various operational, security, reporting and record-keeping requirements as specified by the NBE.
In its call for applications in early August, the NBE said that business entities owned by Ethiopian nationals, non-resident Ethiopians or foreign citizens of Ethiopian origin are eligible to operate independent FX bureaus.
According to the Ethiopian government, recent revisions in the country's foreign exchange system and the shift to a market-based exchange regime are part of a broader macroeconomic reform policy aimed at correcting foreign exchange distortions and reducing inflation by modernizing the monetary policy framework. ■
