Ethiopia’s interbank money market has processed 1.26 trillion birr in cumulative trades since its launch in October 2024, providing banks with a platform to manage short-term liquidity and support monetary policy implementation.

The National Bank of Ethiopia (NBE) designed the market to allow banks facing temporary cash shortages to borrow from institutions with surplus funds, reducing reliance on central bank emergency lending. The platform operates under the NBE’s interest rate corridor of 15 percent plus or minus three percent and complements the central bank’s Standing Lending and Deposit Facilities.

The Monetary Policy Committee (MPC) noted that while the banking sector remains broadly sound, some institutions continue to face liquidity pressures due to high loan-to-deposit ratios. Rapid credit growth, which reached 44.5 percent year-on-year by November 2025, and broad money expansion of 38.8 percent have heightened the importance of the interbank market in smoothing liquidity flows. Reserve money rose 67.3 percent, driven by the central bank’s accumulation of foreign exchange from gold exports, prompting the MPC to raise the reserve requirement ratio to 10 percent on a monthly average.

The market has been cited as a key step in modernising Ethiopia’s financial system, improving transparency, and enhancing the transmission of monetary policy. The MPC emphasised that the interbank market will continue to support financial stability and efficient liquidity management as credit and liquidity conditions evolve.