Ethiopia is in the research phase.

CBDC Development

In 2023, the National Bank of Ethiopia announced on X that it would “pursue a strategy of enhancing electronic payment system, modernizing current currency management system and exploring the potential of CBDC.”

In 2024, it was reported in The Ethiopian Reporter that the National Bank of Ethiopia was beginning to study CBDCs as part of the Homegrown Economic Reform Agenda. Later, in June 2024, the National Bank of Ethiopia noted in a press release that the Ethiopian Council of Ministers approved a draft proclamation to establish a legal framework for introducing a CBDC.

Human Rights and Civil Liberties Concerns

Ethiopia earned a 21 out of 100 in Freedom House’s 2023 Freedom in the World report. Corruption, surveillance, and oppression remain major issues for the country. The issuance and adoption of a CBDC could worsen these issues.

As reported by Freedom House, “Corruption and unequal resource distribution are significant problems that have contributed to the recent civil unrest throughout Ethiopia.” Freedom House further reported that “Corruption within the justice system remains a significant challenge, and judges caught accepting bribes are rarely punished.” The existence of pervasive corruption is a major concern with CBDCs because it calls into question any promises that might be made by the government to limit surveillance, control, or other risks of CBDCs. Furthermore, the existence of corruption calls into question whether CBDC policies might be designed to exert political favoritism through subsidies, price controls, or other targeted restrictions.

Surveillance is another common issue in Ethiopia. Freedom House reported that “Government security agencies surveil individuals and politicians through wire-tapping.” Freedom House added that “Digital surveillance and the use of individual informants to spy on people is widespread.” Unfortunately, a CBDC could be used to greatly expand surveillance by putting financial records on government databases by default.

“International and Ethiopian journalists and media networks repeatedly come under government pressure over their coverage of the internal conflicts in Tigray and Oromo, as well as other political dynamics,” according to Freedom House. In fact, journalists have also been “detained, expelled from the country, or had their licenses revoked.” Unfortunately, a CBDC could be used as another tool in this effort. Across the world, governments have often turned to freezing and seizing the money of activists, political rivals, and protestors to undermine the opposition. A CBDC would make such initiatives easier by allowing governments to take direct control of each citizen’s finances.

For additional information on concerns regarding violations of human rights and civil liberties, see the following reports by Amnesty International, Financial Tyranny Index, Freedom House, Human Rights Watch, Privacy International, and the U.S. Department of State. For additional information on concerns regarding the risks of CBDCs, see the following webpage and report by the Cato Institute: The Risks of CBDCs and Central Bank Digital Currency: Assessing the Risks and Dispelling the Myths.

For additional information regarding metrics, the methodology page explains each of the data points and provides their respective sources.