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Toronto – The National Bank of Ethiopia on Friday introduced new directives allowing banks to engage in investment in non-Banking businesses. The bank expressed its belief the newly introduced regulation could increase the bank’s contribution to the capital market ecosystem.
“The Board of Directors of the National Bank of Ethiopia has issued a directive allowing banks to invest in and establish subsidiary capital market service providers, including investment banks. This strategic decision is anticipated to significantly enhance the role of banks in nurturing a robust and effective capital market ecosystem,” the Bank said in a brief statement shared on social media.
The directive is applicable to all banks (private and public) operating in Ethiopia.
There are, however, restrictions to the extent to which the banks could engage in a non-banking business investment. For example, the directive says “No Bank Shall invest more than 10 % of its total capital in real estate acquisition and development.” If it is to, it has to get the permission of the National Bank of Ethiopia.
There are also restrictions in investment in insurance businesses.
The full content of the New Investment Directive for Banks in Ethiopia is available here in a PDF format.
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If this scheme is not tightly-controlled it will undoubtedly lead to the 2008 ‘subprime mortgage crisis or similar to that, in the Real-estate sector, and other unfinished development ( “bridge to nowhere”) simply because ‘private capital’ ( in this case the Banks) are always IN THE BUSINESS OF short-term PROFIT, therefore the government’s GOOD-intention to stimulate economic ‘development’ via this scheme may not be fully achieved, without dire societal consequences.
Professor Michael Hudson argues: ( Lecture video attached)
Neoliberal Economic model (free-market capitalism) does not care about ‘development’ but PROFIT for the capitalist (1%) ; vs Modern Economic theory principles where development and labor rights are at the core; where loan is made to those who can afford to pay and in the likelihood of those who cannot pay, debt cancelation is enforced instead of taking away their land & home and making them homeless; which does promote societal problems in the long run (over time). ( as happened in the 2008 US financial crash)
“You want to design an economy without a ‘Central Bank’ of the Treasury. The central bank is to prevent the Treasury from making public money and to make sure that the central bank represents the commercial banks to ‘indebt’ the rest of the economy rather than the economy working FREE of DEBT.”,
Prof Michael Hudson
“Governments do not have to borrow money from a private source (Banks, foreign entities (IMF), oligarchy, etc.) it can simply print its own money for specific ‘Economic development’ purposes throughout the country; without the need to pay interest to outside lenders.” (Paraphrasing.)
Prof. Michael Hudson
Example given:
“A Canadian government wanted to borrow money from the Swiss Bank to make funds (loan) available to its provinces for development purposes. Then the Money from the Swiss bank was deposited in the Bank of Canada, and the Bank of Canada printed an equivalent amount in Canadian dollars to give it to the Provinces. Which led to the unnecessary ‘interest payment’ by the Bank of Canada to the Swiss Bank, which it could have printed itself, without needing the Swiss fund sitting in its books.” (paraphrasing)
“China does not have a ‘debt problem’, because the government is the country’s Banker, and it can create/print whatever amount it needs.”
Prof. Michael Hudson.
Lecture: Debt, Empires, and Oligarchs – Dr. Michael Hudson (Part 1/2)
Link = youtube.com/watch?v=pSBvXCwUQYQ&ab_channel=TheDemystifySciPodcast
Part 2
Link = youtube.com/watch?v=XyybzneS0To&ab_channel=TheDemystifySciPodcast
Be well.
i thank so much dear am happy your advice
Further discussion about ‘Financial Capitalism’ (International Bankers)
“How Finance Capitalism Ruined the World” – Dr. Michael Hudson & Dr. Steve Keen,
Link = youtube.com/watch?v=1q8wgMQjDFI&ab_channel=TheDemystifySciPodcast
Be well.
World Bank is on the ropes, its & IMF’s predatory practices in the Global South ( Global Majority) has been nothing but desaturase, global south nations (Ethiopia is mentioned) are looking for better alternative sources, and some such sources are appearing on the seen.
The opportunity to repay the predators loans and working with the new lenders with lower interest and better payment options is becoming a reality…
Soon both WB and IMF have to move their predatory businesses to the deindustrializing Europe.
“CHINA Leave World Bank: End of Western Financial Institutions?”
Link = youtube.com/watch?v=IAfpz9A_d28&ab_channel=Fastepo
Be well.