The reasons behind the limiting of the amount cash withdrawal


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The reasons behind the limiting of the amount cash withdrawal The Ethiopian National Bank has passed a new legislation recently. It has limited the amount of cash allowed to be taken out at once. It is allowed for an individual to only withdraw up to 200,000 birr per day and 1,000,000 per month in cash; an organization could withdraw up to 300,000 birr per day and 2.5 million birr per month in cash. The National Bank manager Ato Yinager Desse has stated that this legislation was passed to control illegal money transactions and tax evasions. The responsibility to enforce this legislation has been passed down to all bank managers. Other types of money transfers such as cheques, ATM and mobile banking will continue. Experts say that there are five main reasons behind this legislation. 1. When the country’s economy is required to remain stable, two types of policies can be passed. The first is called Fiscal policy which can be passed by the Ministry of Revenues. The second one is called monetary policy and only the National Bank has the authority to pass it. 2. The new legislation may have arisen from the National bank’s need to find out the amount of cash in the system to fight illegal businesses and transactions. It is estimated that there 700-800 billion in cash circulating in the system. The government has not admitted it but experts have speculated that there is shortage of cash in the system. Admitting this may cause political and economic instability. 3. As the number of infected people increases daily, movements become more and more limited and lines at the bank become more exhausting, people are starting to take out their money and holding on to their cash and limiting their expenditures. If it goes on like this, there would not be enough cash left at the banks. 4. To limit tax evasion. Recently organizations are filing for bankruptcy so they would not pay taxes. But this could cause transactions outside of banks which eventually will cause the economy to plummet. 5. Control illegal transactions. As travelling is restricted people cannot go freely carrying bags of cash. So they will be forced to use banks which question the source to use banks

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