Central Banking in Kenya

Abstract

The history of the Central Bank of Kenya (CBK) dates back to the pre-colonial period when the East African Currency Board performed central banking functions before CBK was established in 1966. Over the first 20 years of its formation, the Bank focused on maintaining the external and internal value of the currency and financial stability. Liberalization reforms followed in early 1990s that led to a market-based economy and a shift in conduct of monetary policy from direct to indirect monetary policy instruments. Legislative amendments granted CBK operational independence and set out clear objective of price stability. The legal and regulatory framework has continued to evolve to reflect the changing domestic and global dynamics. Going forward, the future of central banking in Kenya will largely be shaped by the emerging financial and technological developments, regional integration initiatives, and the evolving global dynamics.