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Central Bank of Kenya (CBK)

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Central Bank of Kenya (CBK)

Mission statement:

The Central Bank of Kenya has the following primary missions:

• To formulate and implement monetary policy directed to achieving and maintaining stability in the general level of prices;

• To foster the liquidity, solvency and proper functioning of a stable market-based financial system;

• To formulate and implement foreign exchange policy;

• To hold and manage its foreign exchange reserves;

• To license and supervise authorized dealers;

• To formulate and implement such policies as best promote the establishment, regulation, and supervision of efficient and effective payment, clearing and settlement systems;

• To act as banker and adviser to, and as fiscal agent to the Government ; and

• To issue currency notes and coins.

Overview:

The Central Bank of Kenya was established in 1966 through an Act of Parliament - the Central Bank of Kenya Act of 1966.

The establishment of the Bank was a direct result of the desire among the three East African states to have independent monetary and financial policies. This led to the collapse of the East Africa Currency Board (EACB) in mid 1960s.

Structure of the Bank

Responsibility for determining the policy of the Central Bank is given by the Central Bank of Kenya Act to the Board of Directors. The Board 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. In the case of the Governor, appointment is for a maximum of two terms of four years each and can only be terminated by a tribunal appointed by the President to investigate his conduct. 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 Act and it's relations with the Government

The Central Bank of Kenya Act of 1966 set out objectives and functions and gave the Central Bank limited autonomy. Since the amendment of the Central Bank of Kenya Act in April 1997, the Central Bank operations have been restructured to conform with ongoing economic reforms. There is now greater monetary autonomy. Though required to support the general economic policy of the Government, the Central Bank has independence in exercising the powers conferred on it by the Central Bank of Kenya (Amendment) Act, 1996. However, both the Government and the Central Bank make mutual consultations on important policy issues. The Central Bank, for example, is required to advise the Government on monetary and fiscal policy issues and other economic issues that may have important ramifications on the Bank's monetary policy.
In fulfilling our vision and mission, we shall:-

• Work with utmost integrity, transparency and accountability.

• Conduct business professionally and efficiently.

• Respect and be collegial to each other.

• Be committed to pursuing public interest.

Vision:

The Central Bank of Kenya will be a model institution guided by law, public interest and best practice in performing its legal functions of achieving monetary and financial stability and ensuring efficient payments systems.

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