The National Bank of Ethiopia has announced the launch of interbank lending, allowing banks to borrow and lend money to each other.
The announcement states that commercial banks can borrow and lend money for short periods, ranging from one day to seven days.
The introduction of interbank lending is expected to have several positive impacts. It will enable banks to efficiently manage their cash flow by covering short-term liquidity shortages or lending surplus funds to other banks.
This will facilitate short-term loans with repayment periods of one day or seven days, further enhancing banks' ability to manage their cash flow.
Ultimately, this will reduce the risk of liquidity shortages and enable banks to provide better services to customers with stable interest rates.
The National Bank has mandated that all interbank lending transactions must be conducted exclusively through the Ethiopian Securities Exchange's trading platform.