From Birr to Bytes: Ethiopia's Central Bank Aligns with Global Financial Messaging Standards

Ethiopia’s central bank has upgraded its real-time gross settlement system, which facilitates high-value interbank payment transactions, to the ISO 20022 messaging standard. The standards subscribe to a global, open system that provides a clear, consistent way to describe financial transactions and messages, regardless of the software or format being used. It removes the confusion that typically arises when financial information is being shared between entities using different terms depending on their country or area of expertise.

The National Bank of Ethiopia announced the update to its automated transfer system (EATS) that facilitates nearly 3.5 million transactions annually valued at five trillion birr, yesterday afternoon. The System, combining the functions of an RTGS and an automated clearing house (ACH), is used by 35 financial institutions, banks, and microfinances, from the 85 currently operating in the country. Participants are required to pay annual membership fees and fork up transaction fees depending on the value of the transferred amount.

EATS rules also levy penalties on financial institutions that violate the rules set at 30,000 birr per violation in the last NBE directive regulating the system. A similar amount is also levied as a penalty on financial institutions that make an RTGS transaction without having adequate funds. The transition to the ISO 20022 standard introduces new functionalities designed to optimize operational efficiency and liquidity management. This includes robust liquidity management tools, enhanced security protocols, and superior transaction integrity measures. Montran Corporation Inc which facilitated the central securities depository (CSD) remains the central bank's primary technology partner.