The Nature, Function, and Independence of the National Bank of Ethiopia: A Comparative Analysis in Light of International Practices

Elsabet Dessalegn Regassa

doi:doi:10.11648/j.ijls.20240703.11

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The Nature, Function, and Independence of the National Bank of Ethiopia: A Comparative Analysis in Light of International Practices

Elsabet Dessalegn Regassa^*

Published in International Journal of Law and Society (Volume 7, Issue 3)

Received: 5 March 2024 Accepted: 16 April 2024 Published: 29 July 2024

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Abstract

A central bank is an autonomous institution that is mainly bestowed with the mandate to ensure the maintenance of price stability by formulating and implementing monetary policy. To fulfill its purposes, the law should make sure that the CB is independent of external influence. Accordingly, the NBE is established to act as the central bank of Ethiopia, empowered to deliver on multiple objectives, including price and exchange stability. Nonetheless, it is evident under its legal framework that the requirements for institutional, functional, and personal independence of the NBE are disregarded. Hence, having this problem in mind and considering the research gap in the particular area, the study attempted to review relevant legal instruments of the NBE, assessing them against parameters of institutional, functional, and personal independence; selected countries’ laws, and the expert opinions of NBE officials and IMF expert to make the required analysis about the nature, functions, and independence of the NBE. Consequently, the study revealed impediments related to the institutional, functional, and personal autonomy of the bank. Thus, concerning institutional independence, there is a lack of clear provisions protecting the bank from government and other entities' influence. The absence of hierarchy between its objectives, the dominance of government representatives in the BoD, the absence of legal limitations on the advances to be provided to the government, and ambiguity as to the role of monetary policy formulation and oversight roles of the BoD are the manifestations of the absence of functional independence. Whereas, in terms of personal autonomy lack of provisions stipulating the security of tenure, qualification criteria, and procedure for the appointment and dismissal of the BoD members, Governor, and Deputies are evident. Having identified these concerns under the current laws, the researcher recommends the relevant revisions of the laws to address the enumerated impediments in line with the best practices of central banks.

Published in	International Journal of Law and Society (Volume 7, Issue 3)
DOI	10.11648/j.ijls.20240703.11
Page(s)	93-106
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Monetary Policy, Fiscal Policy, Institutional Independence, Functional Independence, Personal Independence

References

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APA Style

Regassa, E. D. (2024). The Nature, Function, and Independence of the National Bank of Ethiopia: A Comparative Analysis in Light of International Practices. International Journal of Law and Society, 7(3), 93-106. https://doi.org/10.11648/j.ijls.20240703.11

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ACS Style

Regassa, E. D. The Nature, Function, and Independence of the National Bank of Ethiopia: A Comparative Analysis in Light of International Practices. Int. J. Law Soc. 2024, 7(3), 93-106. doi: 10.11648/j.ijls.20240703.11

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AMA Style

Regassa ED. The Nature, Function, and Independence of the National Bank of Ethiopia: A Comparative Analysis in Light of International Practices. Int J Law Soc. 2024;7(3):93-106. doi: 10.11648/j.ijls.20240703.11

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@article{10.11648/j.ijls.20240703.11,
  author = {Elsabet Dessalegn Regassa},
  title = {The Nature, Function, and Independence of the National Bank of Ethiopia: A Comparative Analysis in Light of International Practices
},
  journal = {International Journal of Law and Society},
  volume = {7},
  number = {3},
  pages = {93-106},
  doi = {10.11648/j.ijls.20240703.11},
  url = {https://doi.org/10.11648/j.ijls.20240703.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijls.20240703.11},
  abstract = {A central bank is an autonomous institution that is mainly bestowed with the mandate to ensure the maintenance of price stability by formulating and implementing monetary policy. To fulfill its purposes, the law should make sure that the CB is independent of external influence. Accordingly, the NBE is established to act as the central bank of Ethiopia, empowered to deliver on multiple objectives, including price and exchange stability. Nonetheless, it is evident under its legal framework that the requirements for institutional, functional, and personal independence of the NBE are disregarded. Hence, having this problem in mind and considering the research gap in the particular area, the study attempted to review relevant legal instruments of the NBE, assessing them against parameters of institutional, functional, and personal independence; selected countries’ laws, and the expert opinions of NBE officials and IMF expert to make the required analysis about the nature, functions, and independence of the NBE. Consequently, the study revealed impediments related to the institutional, functional, and personal autonomy of the bank. Thus, concerning institutional independence, there is a lack of clear provisions protecting the bank from government and other entities' influence. The absence of hierarchy between its objectives, the dominance of government representatives in the BoD, the absence of legal limitations on the advances to be provided to the government, and ambiguity as to the role of monetary policy formulation and oversight roles of the BoD are the manifestations of the absence of functional independence. Whereas, in terms of personal autonomy lack of provisions stipulating the security of tenure, qualification criteria, and procedure for the appointment and dismissal of the BoD members, Governor, and Deputies are evident. Having identified these concerns under the current laws, the researcher recommends the relevant revisions of the laws to address the enumerated impediments in line with the best practices of central banks.
},
 year = {2024}
}

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TY  - JOUR
T1  - The Nature, Function, and Independence of the National Bank of Ethiopia: A Comparative Analysis in Light of International Practices

AU  - Elsabet Dessalegn Regassa
Y1  - 2024/07/29
PY  - 2024
N1  - https://doi.org/10.11648/j.ijls.20240703.11
DO  - 10.11648/j.ijls.20240703.11
T2  - International Journal of Law and Society
JF  - International Journal of Law and Society
JO  - International Journal of Law and Society
SP  - 93
EP  - 106
PB  - Science Publishing Group
SN  - 2640-1908
UR  - https://doi.org/10.11648/j.ijls.20240703.11
AB  - A central bank is an autonomous institution that is mainly bestowed with the mandate to ensure the maintenance of price stability by formulating and implementing monetary policy. To fulfill its purposes, the law should make sure that the CB is independent of external influence. Accordingly, the NBE is established to act as the central bank of Ethiopia, empowered to deliver on multiple objectives, including price and exchange stability. Nonetheless, it is evident under its legal framework that the requirements for institutional, functional, and personal independence of the NBE are disregarded. Hence, having this problem in mind and considering the research gap in the particular area, the study attempted to review relevant legal instruments of the NBE, assessing them against parameters of institutional, functional, and personal independence; selected countries’ laws, and the expert opinions of NBE officials and IMF expert to make the required analysis about the nature, functions, and independence of the NBE. Consequently, the study revealed impediments related to the institutional, functional, and personal autonomy of the bank. Thus, concerning institutional independence, there is a lack of clear provisions protecting the bank from government and other entities' influence. The absence of hierarchy between its objectives, the dominance of government representatives in the BoD, the absence of legal limitations on the advances to be provided to the government, and ambiguity as to the role of monetary policy formulation and oversight roles of the BoD are the manifestations of the absence of functional independence. Whereas, in terms of personal autonomy lack of provisions stipulating the security of tenure, qualification criteria, and procedure for the appointment and dismissal of the BoD members, Governor, and Deputies are evident. Having identified these concerns under the current laws, the researcher recommends the relevant revisions of the laws to address the enumerated impediments in line with the best practices of central banks.

VL  - 7
IS  - 3
ER  -

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Elsabet Dessalegn Regassa

College of Law and Governance Studies School of Law, Addis Ababa University, Addis Ababa, Ethiopia

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APA Style

Regassa, E. D. (2024). The Nature, Function, and Independence of the National Bank of Ethiopia: A Comparative Analysis in Light of International Practices. International Journal of Law and Society, 7(3), 93-106. https://doi.org/10.11648/j.ijls.20240703.11

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ACS Style

Regassa, E. D. The Nature, Function, and Independence of the National Bank of Ethiopia: A Comparative Analysis in Light of International Practices. Int. J. Law Soc. 2024, 7(3), 93-106. doi: 10.11648/j.ijls.20240703.11

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AMA Style

Regassa ED. The Nature, Function, and Independence of the National Bank of Ethiopia: A Comparative Analysis in Light of International Practices. Int J Law Soc. 2024;7(3):93-106. doi: 10.11648/j.ijls.20240703.11

Copy | Download

@article{10.11648/j.ijls.20240703.11,
  author = {Elsabet Dessalegn Regassa},
  title = {The Nature, Function, and Independence of the National Bank of Ethiopia: A Comparative Analysis in Light of International Practices
},
  journal = {International Journal of Law and Society},
  volume = {7},
  number = {3},
  pages = {93-106},
  doi = {10.11648/j.ijls.20240703.11},
  url = {https://doi.org/10.11648/j.ijls.20240703.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijls.20240703.11},
  abstract = {A central bank is an autonomous institution that is mainly bestowed with the mandate to ensure the maintenance of price stability by formulating and implementing monetary policy. To fulfill its purposes, the law should make sure that the CB is independent of external influence. Accordingly, the NBE is established to act as the central bank of Ethiopia, empowered to deliver on multiple objectives, including price and exchange stability. Nonetheless, it is evident under its legal framework that the requirements for institutional, functional, and personal independence of the NBE are disregarded. Hence, having this problem in mind and considering the research gap in the particular area, the study attempted to review relevant legal instruments of the NBE, assessing them against parameters of institutional, functional, and personal independence; selected countries’ laws, and the expert opinions of NBE officials and IMF expert to make the required analysis about the nature, functions, and independence of the NBE. Consequently, the study revealed impediments related to the institutional, functional, and personal autonomy of the bank. Thus, concerning institutional independence, there is a lack of clear provisions protecting the bank from government and other entities' influence. The absence of hierarchy between its objectives, the dominance of government representatives in the BoD, the absence of legal limitations on the advances to be provided to the government, and ambiguity as to the role of monetary policy formulation and oversight roles of the BoD are the manifestations of the absence of functional independence. Whereas, in terms of personal autonomy lack of provisions stipulating the security of tenure, qualification criteria, and procedure for the appointment and dismissal of the BoD members, Governor, and Deputies are evident. Having identified these concerns under the current laws, the researcher recommends the relevant revisions of the laws to address the enumerated impediments in line with the best practices of central banks.
},
 year = {2024}
}

Copy | Download

TY  - JOUR
T1  - The Nature, Function, and Independence of the National Bank of Ethiopia: A Comparative Analysis in Light of International Practices

AU  - Elsabet Dessalegn Regassa
Y1  - 2024/07/29
PY  - 2024
N1  - https://doi.org/10.11648/j.ijls.20240703.11
DO  - 10.11648/j.ijls.20240703.11
T2  - International Journal of Law and Society
JF  - International Journal of Law and Society
JO  - International Journal of Law and Society
SP  - 93
EP  - 106
PB  - Science Publishing Group
SN  - 2640-1908
UR  - https://doi.org/10.11648/j.ijls.20240703.11
AB  - A central bank is an autonomous institution that is mainly bestowed with the mandate to ensure the maintenance of price stability by formulating and implementing monetary policy. To fulfill its purposes, the law should make sure that the CB is independent of external influence. Accordingly, the NBE is established to act as the central bank of Ethiopia, empowered to deliver on multiple objectives, including price and exchange stability. Nonetheless, it is evident under its legal framework that the requirements for institutional, functional, and personal independence of the NBE are disregarded. Hence, having this problem in mind and considering the research gap in the particular area, the study attempted to review relevant legal instruments of the NBE, assessing them against parameters of institutional, functional, and personal independence; selected countries’ laws, and the expert opinions of NBE officials and IMF expert to make the required analysis about the nature, functions, and independence of the NBE. Consequently, the study revealed impediments related to the institutional, functional, and personal autonomy of the bank. Thus, concerning institutional independence, there is a lack of clear provisions protecting the bank from government and other entities' influence. The absence of hierarchy between its objectives, the dominance of government representatives in the BoD, the absence of legal limitations on the advances to be provided to the government, and ambiguity as to the role of monetary policy formulation and oversight roles of the BoD are the manifestations of the absence of functional independence. Whereas, in terms of personal autonomy lack of provisions stipulating the security of tenure, qualification criteria, and procedure for the appointment and dismissal of the BoD members, Governor, and Deputies are evident. Having identified these concerns under the current laws, the researcher recommends the relevant revisions of the laws to address the enumerated impediments in line with the best practices of central banks.

VL  - 7
IS  - 3
ER  -

Copy | Download