Ethiopia's central bank has joined the Pan-African Payment and Settlement System (PAPSS), the platform said on Thursday, bringing the country closer to full integration into the continent's financial and payments system.

PAPSS allows parties to transact directly in local currencies, aiming to boost trade and commerce by cutting costs of cross-border payments.

It allows businesses to bypass the dollar during transactions, and removes the need for correspondent banks abroad that payments were routed through in the past.

"Ethiopia’s integration into the PAPSS network represents an important step in our continued efforts to modernise our financial system and deepen our economic connections with the rest of Africa," Eyob Tekalign, the governor of the bank, said in a statement.

Launched in January 2022 with just 10 commercial banks, PAPSS is now operates in more than 15 countries including Nigeria, Zambia, Malawi, Kenya and Tunisia, and has more than 150 commercial banks in its network - though South Africa remains outside the network.

It is designed to complement regional trade integration efforts by supporting payments, including the implementation of the African Free Trade Area.