The Central Bank of Kenya is Kenya's central bank. The bank is located in Nairobi. The current governor of the bank is Professor Njuguna Ndungu whose appointment took effect from March 4, 2007. Prof Ndung'u is an Associate Professor of Economics at the University of Nairobi and holds a PhD in economics from the University of Gothenburg, Sweden, and master's and bachelor's degrees in economics from the University of Nairobi. The bank's name is abbreviated to "CBK".

Central Bank of Kenya was founded in 1966 after the dissolution of East Africa Currency Board (EACB).

The Bank is active in promoting financial inclusion policy and is a leading member of the Alliance for Financial Inclusion. It is also one of the original 17 regulatory institutions to make specific national commitments to financial inclusion under the Maya Declaration during the 2011 Global Policy Forum in Mexico.

Objectives
The Central Bank of Kenya's objectives are laid down in the Central Bank of Kenya (Amendment) Act, 1996 as follows:

Principal Objectives

• The first principal objective shall be to formulate and implement monetary policy directed to achieving and maintaining stability in the general level of prices;
• The second principal objective shall be to foster the liquidity, solvency and proper functioning of a stable market based financial system.

Secondary Objectives

Without prejudice to the generality of the above two principal objectives, the Bank's secondary objectives shall be to:

• Formulate and implement foreign exchange policy;
• Hold and manage its foreign exchange reserves;
• License and supervise authorized dealers in the money market;
• Promote the smooth operation of payments, clearing and settlement systems;
• Act as a banker and adviser to, and as fiscal agent of the Government;
• Issue currency notes and coins.

Structure of the Bank

Under the Central Bank of Kenya Act, the responsibility for determining the policy of the Bank, other than the formulation of monetary policy, is given to the Board of Directors. The Monetary Policy Committee of the Bank is responsible for formulating monetary policy.

The Board of Directors of the Bank consists of eight members:

• the Governor, who is also its chairman;
• the Deputy Governor, who is the deputy chairman;
• the Permanent Secretary to the Treasury who is a non-voting member;
• five other non-executive directors.

All members are appointed by the President to hold office for a term of four years and are eligible for reappointment once, provided that a Board member shall hold office for not more than two terms. The executive management team comprises the Governor, the Deputy Governor and fifteen heads of department who report to the Governor. The Bank operates from its head office in Nairobi and has branch offices in Mombasa, Kisumu and Eldoret. The Bank also owns the Kenya School of Monetary Studies (KSMS) which is headed by an executive director answerable to the Governor.

The Central Bank’s overall objective is to formulate and implement such policies as to best promote the establishment, regulation and supervision of efficient, effective payment, clearing and settlement systems.

Bank Supervision

One of the Central Bank of Kenya's mandate is fostering the liquidity, solvency and proper functioning of a market-based financial system. This is achieved through the following:

• developing appropriate laws, regulations and guidelines that govern the players in the banking sector. These include the Banking Act, Micro finance Act, Central Bank of Kenya Act and related Prudential Guidelines and Regulations;
• continuous review of the banking sector laws, regulations and guidelines to ensure that they remain relevant;
• licensing banks, non-bank financial institutions, mortgage finance companies, building societies, credit reference bureaus, foreign exchange bureaus and deposit taking micro finance institutions;
• inspection of banks, non-bank financial institutions, mortgage finance companies, building societies, credit reference bureaus, foreign exchange bureaus and deposit taking micro finance institutions to ensure that they comply with all the relevant laws, regulations and guidelines and protect the interests of depositors;
• analysis of financial reports and other returns from banking sector players to confirm compliance with the relevant laws, regulations and guidelines;
• facilitating the introduction of initiatives that promote enhanced financial inclusion such as introduction of agent banking, credit information sharing and licensing of deposit taking micro finance institutions.

The Central Bank’s principal object is formulation and implementation of monetary policy directed to achieving and maintaining stability in the general level of prices. The aim is to achieve stable prices – that is low inflation - and to sustain the value of the Kenya shilling.

Useful links

Currency of Kenya:

Kenyan shilling

List of Central Banks:

Central Banks

Official website of Central Bank of Kenya:

www.centralbank.go.ke

Commercial Banks and Mortgage Fiance:

www.centralbank.go.ke

Finance Minister of Kenya:

www.treasury.go.ke