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3 Hawassa U. J.L. 127 (2019)
Legal Independence of the National Bank of Ethiopia as a Supervisor and Regulator of the Banking Business

handle is hein.journals/hujl3 and id is 134 raw text is: 


Legal Independence of the National Bank of Ethiopia


Legal Independence of the National Bank of Ethiopia as a Supervisor and

Regulator of the Banking Business


                                                                      Nigus Zerefu*


Abstract

Central bank's independence has been an issue since distant past in history and many
states were striving to assure independence of their national banks. However, African
countries including Ethiopia are found to have challenges in that regard. Having this fact
in mind, the central objective of this paper is to assess de-jure independence of National
Bank of Ethiopia in light of internationally accepted indicators of independence.
Independence of central banks has two categories: industry and political autonomy.
Political autonomy again has other three categories. These are objective autonomy,
instrument autonomy and economic autonomy. There are two internationally agreed
indicators to assess the independence or otherwise of national banks, namely legal and
non-legal indicators of independence. The former includes banks having objective
independence, monetary policy independence of banks, existence of clear and open conflict
resolution mechanism, institutional independence, and limited credit to the government
and financial autonomy. The latter, on the other hand, incorporates turnover to governor
of central bank and empirical evidence regarding practical enforcement of legal indicators
of independence.

Weighed in light of the first indicators, the National Bank of Ethiopia is far less
independent. Some of the indicators of less independence of the National Bank include first
absence of plain indication about objective autonomy (because it is accountable to the
central government). Second, a long handed intervention of government over the affairs of
the National Bank such as appointment of chairperson and board members of the Bank;
and lastly, absence of an explicit limit over the money to be borrowed by the government
from the National Bank. One way or another, independence of the National Bank of
Ethiopia is very problematic. Hence, recommendations are forwarded requesting for a
lessened intervention of government and its politicians in the affairs of National Bank.






LLB, Asst. Lecturer, at Debremarkos University School of Law, (currently LLM student Business
  and corporate law at Bahirdar University School of Law). The writer can be reached at
  eqazejrefuC @mail.com

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