We all have seen “The Central Bank of Kenya” christened on our notes and coins. It was established by an Act of Parliament of March 24, 1966. The bank became operational 6 months later on September 14, 1966. Currently, it is enshrined in the Constitution under Article 231. Before CBK, the East African Currency Board (EACB) was responsible for issuing currency notes within the East African region. This continued until independence (1963) when it ( the EACB) published a report recommending the three East African countries to establish the East African Central Bank to regulate banking instititutions and act as a banker to the three governments. The EACB performed central central banking roles, such as providing government with credit and offering loans to commercial banks to finance crop growing. Unfortunately, the board could not match the functions provided by a central bank. As a result, each of the three countries (Kenya, Tanzania, and Uganda) formed its own central bank.
Key milestones of the CBK
The CBK has been in existence for more than 55 years. It has made notable strides in the implementation of its functions. The bank staff has also increased from 60 people in 1966 to over 1,300 workers in the present day. In addition to the head office in Nairobi, the Central Bank of Kenya has three branches in Mombasa, Eldoret, and Kisumu. It has four centres in Kisii, Meru, Nakuru, and Nyeri. Kenya has a commendable and enabling environment to have facilitated the key milestones for the bank. Read more about the financial key milestones.
The core functions of the Central Bank of Kenya
The main functions of the CBK as stipulated by the constitution of Kenya are:
- formulation of the monetary policy to promote price stability, improve stability in the banking sector, and fostering liquidity and solvency,
- regulating the financial markets,
- setting up and facilitating national payment systems (NPS),
- offering banking services to the Government of Kenya, commercial banks, and other financial institutions,
- supervising commercial banks and other financial institutions
- offering currency services by issuing currency notes and coins.