WHEREAS, banks play an important role in economic development through mobilization of funds and channeling same to various sectors and occupy a central place in the payment and settlement system of the country’s economy; WHEREAS, opening the banking sector for foreign investment with a carefully designed legal and regulatory framework, is believed to improve competitiveness and efficiency of the sector and contribute to sustainable economic growth;

WHEREAS, it is found essential to have an effective resolution regime that provides the resolution authority that is, National Bank with a broad range of powers and options needed to resolve a bank considered no longer viable and has no reasonable prospect of becoming so in a manner that does not cause severe systemic disruption and loss; WHEREAS, the banking business, if not properly managed, would have the potential to generate financial system and macroeconomic instability; WHEREAS, the cost of financial system and macroeconomic instability to the general public and the Government is significant;

WHEREAS, it is found essential to continually ensure safety, soundness and stability of the banking business by having a comprehensive legal framework for the licensing and supervision of the banking sector which is well aligned with the current and emerging development of the sector; NOW, THEREFORE, in accordance with Article 55(1) of the Constitution of the Federal Democratic Republic of Ethiopia, it is hereby proclaimed as follows.