Whereas, the National bank of Ethiopia is vested with powers, duties and responsibilities of monetary management and regulation and supervision of banks.

Whereas, statutory reserve requirement, which obliges banks to hold a proportion of their deposit balance with the National Bank of Ethiopia, is one of the important monetary policy instruments and prudential regulation tools.

Now, therefore, the National Bank of Ethiopia has issued these Directives pursuant to the authorities vested in it by Article 16(1) (a) of the National Bank of Ethiopia Establishment (as Amended) Proclamation No. 591/2008 and Article 20(3) of Banking Business Proclamation No. 592/2008.