The development of a vibrant and active private banking system that complements existing public sector work is considered important to Ethiopia’s economic progress and key to the success of the government’s “Growth and Transformation Plan,” an ambitious five-year development plan to assist the country in reaching “middle income” status. This brief considers the manner in which Ethiopia’s public and private banking systems affect the development of the national economy, with particular reference to anti–money laundering and countering the financing of terrorism vulnerabilities. Ethiopia is not alone in facing this challenge, as banking industry liberalization is a key consideration in a range of countries, from large economies such as India to regional neighbors such as Uganda, particularly as the 2008 global financial crisis has raised some important questions about the merits of uncontrolled banking industry development.

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