The Central Bank said the directive is to help tackle tax evasion and encourage more efficient use of money.
Per the directive, an individual can withdraw up to 200,000 birrs ($5,800) a day.
One person can only withdraw 1m birr ($29,000) in a month.
However, businesses can withdraw higher amounts. The Ethiopian central bank said businesses can withdraw around $8,000 per day and close to $74,000 per month.
According to the BBC, the Governor of the central bank, Yinager Dessie, said this directive will help manage liquidity for financial institutions. He added that they would sanction banks and credit companies that fail to comply with the directive.
Ethiopia’s economy is described as a cash-heavy one. Experts have said that this new directive may affect transactions for small businesses as they adapt to the new measures.
Other experts have raised concerns about the timing of the announcement. They believe this is unhelpful in this time when the country’s economy is grappling with the economic impacts of the coronavirus pandemic.