Central Bank of Eswatini (CBE)

Overview

Confidence: 93%

Currency: Lilangeni (SZL)

CMA Member: Yes

Exchange Rate Regime: Fixed (SZL pegged to ZAR 1:1)

The Central Bank of Eswatini (formerly Swaziland), operating under the name Umntsholi wemaswati, is the monetary authority of the Kingdom of Eswatini, located in Southern Africa between South Africa and Mozambique. As a member of the Common Monetary Area (CMA), Eswatini maintains its currency, the lilangeni (SZL), at fixed parity with the South African rand, linking monetary policy and exchange rate management to regional coordination frameworks.

The CBE is mandated to foster price and financial stability conducive to economic development, formulate and implement sound monetary policy, regulate and supervise the financial sector, issue and redeem currency, manage foreign reserves, and conduct research supporting monetary policy formulation. Its governance structure includes a Board of Directors and management committees ensuring institutional independence and technical competence in financial regulation.

Basic Identity

Classification

Inclusion Justification

What This Entity Oversees

The CBE's Banking Supervision Division oversees approximately 11 licensed commercial banks, including major institutions such as Eswatini Bank, Nedbank Eswatini, and FNB Eswatini. Supervision operates under a risk-based framework assessing capital adequacy, asset quality, management strength, earnings, and liquidity.

Supervisory Mandate:

• Licensing and Authorization — Approval of bank establishment, branch operations, and service expansion

• Capital Adequacy Monitoring — Enforcement of minimum capital adequacy ratios (Basel III aligned, with countercyclical buffers)

• Prudential Standards — Large exposures limits, loan classification, provisioning, connected lending restrictions

• Compliance Review — Regulatory compliance assessment and sanctions for breaches

• Onsite and Offsite Supervision — Regular examinations and continuous monitoring of financial health

Current Supervisory Focus:

• Basel III implementation and capital buffer requirements

• Digital finance and fintech regulation (mobile money, payment service providers)

• Cybersecurity and operational resilience of critical payment infrastructure

• AML/CFT compliance and sanctions screening

• Stress testing and macroprudential risk assessment

The CBE has established formal supervisory colleges for systemically important institutions, with enhanced governance, liquidity, and capital standards.

The CBE enforces a comprehensive anti-money laundering and counter-terrorist financing framework under the Financial Intelligence Act 2006 (amended), aligned with Financial Action Task Force (FATF) standards and international best practices.

AML/CFT Regulatory Requirements:

• Customer Due Diligence (CDD) — Mandatory KYC procedures for account opening, including beneficial ownership verification

• Enhanced Due Diligence (EDD) — Intensified scrutiny for high-risk customers, including politically exposed persons (PEPs)

• Suspicious Activity Reporting (SAR) — Mandatory reporting of suspected money laundering, terrorist financing, or other illicit activity

• Sanctions Compliance — Integration with UN Security Council and national sanctions lists; transaction screening

• Record Retention — Maintenance of transaction records for minimum five years

• Staff Training — Regular compliance training for banking staff on AML/CFT procedures and risk detection

The Financial Intelligence Unit (FIU), established under the Financial Intelligence Act, operates as an autonomous body coordinating with law enforcement and international FIUs to investigate and prosecute AML/CFT violations. The CBE provides technical support and supervision of FIU compliance by financial institutions.

Regulatory Powers

The CBE possesses comprehensive enforcement authority under the Central Bank Act 1974, Financial Institutions Act 1992, and sectoral legislation. Enforcement actions escalate from advisory guidance to formal sanctions and license revocation.

Enforcement Powers:

• Administrative Fines — Monetary penalties for regulatory breaches, proportionate to violation severity

• Remedial Directives — Formal instructions requiring corrective actions within specified periods

• Cease and Desist Orders — Prohibition of specific activities, products, or service lines

• Capital Injections — Directives to increase capital in response to solvency or stability concerns

• Management Actions — Authority to remove or replace directors and senior officers

• License Suspension/Revocation — Withdrawal of banking license for systemic violations or insolvency

The CBE publishes enforcement actions and supervisory updates to maintain transparency and accountability.

Regulatory Role and Function

Legal Foundation

The Central Bank of Eswatini operates under the Central Bank of Eswatini Act 1974 (as amended), which establishes its legal status, governance structure, and core mandate. The Act confers upon the CBE exclusive authority to issue currency, conduct monetary policy, and supervise financial institutions.

Additional legislative frameworks include:

• Financial Institutions Act 1992 — Licensing, regulation, and supervision of deposit-taking institutions

• Eswatini Development and Savings Bank Act 1992 — Governance and operations of state-owned development finance institution

• Payment Systems Act 1999 — Regulation of payment and settlement systems

• Financial Intelligence Act 2006 — Anti-money laundering and counter-terrorist financing authority and procedures

Recent Legislative Development (2024–2026):

With technical assistance from the International Monetary Fund, the CBE is advancing legislative amendments including the Central Bank Bill, Financial Institutions Bill, and Financial Stability Bill. These reforms aim to strengthen regulatory capacity, enhance financial stability frameworks, and modernize supervisory tools to address emerging risks including digital finance and cybersecurity.

Licensing and Authorization Relevance

The Central Bank of Eswatini (CBE) is a key licensing authority in Eswatini's financial system:

The licensing process typically involves assessment of capital adequacy, fitness and propriety of management, business plan viability, AML/CFT compliance frameworks, and IT systems readiness.

Payments and Money Movement Relevance

The CBE operates within the CMA framework, maintaining the lilangeni at fixed parity with the South African rand (SZL 1 = ZAR 1). This arrangement constrains independent monetary policy options; instead, the CBE focuses on liquidity management, coordination with the South African Reserve Bank (SARB), and domestic credit conditions to support price stability and economic development objectives.

Monetary Policy Framework:

• Inflation Target: Medium-term inflation target in the range of 3–6% (aligned with CMA objectives)

• Policy Coordination: Quarterly policy coordination with SARB and other CMA central banks

• Domestic Instruments: Open Market Operations (OMOs), standing facilities, and reserve requirement management

Key Policy Actions (Recent):

• Monetary Policy Statement (January 30, 2026) — CBE maintained key interest rates amid regional inflation dynamics and global financial conditions

• Enhanced forward guidance on monetary conditions to support banking sector stability

• Coordination with SARB on liquidity provision and interbank rate management

Policy Committee:

The Monetary Policy Committee (MPC), chaired by the Governor, meets regularly to assess economic conditions, inflation trends, employment, and financial stability indicators. The Committee directs open market operations and provides forward guidance on policy stance.

The CBE exercises oversight of Eswatini's national payment system, encompassing real-time gross settlement (RTGS), automated clearing house (ACH), and card payment networks. The Payment Systems Act 1999 provides the regulatory foundation for system oversight and operator licensing.

Payment Infrastructure:

• RTGS System — High-value, systemically important payments between banks and government

• ACH System — Check clearing, electronic fund transfers, and bulk payments

• Card Networks — Debit, credit, and prepaid card schemes operating in Eswatini

• Mobile Money Services — CBE-licensed mobile money operators providing payment and remittance services

Current Initiatives:

The CBE is modernizing payment system infrastructure through upgraded RTGS technology, enhanced interoperability among payment service providers, and development of a regulatory framework for digital wallets and CBDC possibilities. Recent priority initiatives include:

• Integration of payment system oversight with broader financial stability monitoring

• Cybersecurity standards and incident response protocols for payment operators

• Expansion of payment services to unbanked and underbanked populations

Eswatini's foreign exchange regime is anchored to the CMA parity arrangement (SZL 1 = ZAR 1). The CBE manages official foreign exchange reserves primarily in South African rand and maintains strict controls on FX allocation and licensing for international transactions.

FX Management:

• Reserve Custodianship — Holdings primarily in ZAR, EUR, USD, and SDR baskets

• Authorized Dealer Licensing — Oversight of banks and specialized dealers permitted to conduct FX transactions

• Import/Export Finance — Issuance of FX allocation licenses for trade finance and current account transactions

• Official Rate Maintenance — Enforcement of official CMA parity rates and prevention of parallel market operations

Cross-border payment flows are facilitated through correspondent banking relationships with SARB and international commercial banks. The CBE participates in regional payment infrastructure including the SADC Payment System (SAPS), enabling efficient settlement of intra-regional transactions.

Payment Systems Governed or Overseen

The CBE operates and/or oversees the national payment and settlement infrastructure of Eswatini. Specific systems include:

[Further detail on specific system names requires verification from official sources]

Relationship to Other Regulators

The CBE actively participates in regional financial stability frameworks and international regulatory coordination:

CMA Coordination:

• Policy alignment with South African Reserve Bank, Bank of Namibia, and Central Bank of Lesotho

• Coordination of monetary policy within CMA principles

• Harmonization of supervisory and regulatory standards

Regional Participation:

• SADC Finance Ministers and Central Banks coordination forums

• SADC Payment System (SAPS) for regional settlement infrastructure

• African Central Banks Working Groups on monetary policy and financial regulation

International Engagement:

• IMF Article IV Consultations and technical assessments

• World Bank and African Development Bank cooperation on financial sector development

• BIS participation in central bank peer networks and standard-setting forums

• FATF Mutual Evaluation Reviews and AML/CFT compliance assessments

The CBE is transitioning toward full Basel III implementation in coordination with other CMA members, with ongoing technical assistance from international financial institutions.

Geography and Jurisdiction Notes

Important Departments and Divisions

Key Public Resources

Head Office:

• Central Bank of Eswatini (Umntsholi wemaswati)

• Mbabane, Eswatini

Telephone: +268 2404-3200

Email: [email protected]

Website: www.centralbank.org.sz

Key Departments:

• Monetary Policy Department

• Banking Supervision Division

• Payment Systems Unit

• International Relations

Governor: Phil Mnisi (2020–present)

Notes on Naming and Language