Central Bank Takes Surprising Move to Replace Currency Notes

The National Bank of Ethiopia (NBE) replaced Ethiopia’s existing currency notes which served the economy for the last 23 years. The bank introduced four new currency notes of 10, 50, 100 and 200 values on September 14, 2020, at the PM office, at the presence of PM Abiy Ahmed, the cabinet and bank presidents.

The existing currency notes have values of 1, 5, 10, 50 and 100. A total of 2.9 billion notes ETB262 billion in value is printed and shipped to NBE vaults, Yinager Dessie, governor of NBE told EBR.  The printing cost of the new currency notes, which took six months to order, print and import; stood at ETB3.6 billion.

Out of ETB139 billion currency in circulation, ETB109 billion is outside the banking system, according to NBE latest report. Ethiopian bankers Association recommended currency replacement six months ago.

“the huge currency outside the banking system has been feeding the informal economy, devastating tax revenue. Forgery and contraband has been critical problem of the economy.” Said Abiy Ahmed.

The government has installed a command post comprising the military, police, federal police and regional governments, in order to undertake the currency replacement operation in three months’ time. Individuals with over ETB10,000 will be replaced in the first month. People can bring the old currencies to the nearest replacement centers installed by the NBE.

The surprising move of the central bank will effectively cut out informal economy networks, apart from political factions daring to the government, according to experts.