Central Bank to adopt a tough regulation stance
11 November 2015, 10:58
Nairobi - In response to recent developments in the financial sector, the Central Bank of Kenya board chairman Mohamed Nyaoga is promising a tough supervisory regime in the country’s financial sector.
Nyaoga said good governance would ensure that the country enhances its position globally as a hub for financial innovation.
“I supported the governor’s endeavours to enhance market discipline and supervision. This will not only promote stability of the financial system, but also help the Central Bank to discharge its core mandate of maintaining price stability,” said Nyaoga.
He spoke in the wake of massive fraud, that hit two Kenyan lenders (Dubai Bank and Imperial Bank) prompting the regulator to place them under receivership.
“The actions taken by the Central Bank of Kenya (CBK) with respect to the two banks were necessary to safeguard the stability of the banking system and protect depositors. The CBK has already stated that the two banks were placed under receivership due to factors that were unique to them, and that the problems in the two banks are not systematic,” he said.
Read Also: Treasury stirs up hope for cheaper bank loans
Nyaoga said going forward, CBK would boost its early warning systems to detect improprieties in the financial sector in order to protect consumers.
“Central banks globally are continuously retooling and enhancing capacity for their staff in order to deal with emerging challenges. Some of these challenges include the increasing sophistication of the operations of the financial sector. In this regard, I support the governor in his strategy to enhance the bank’s effectiveness and efficiency in the delivery of its functions,” said Nyaoga.
CBK has a new governance model where the governor is no longer the chairman of the board.
Nyaoga said the new system would help boost effectiveness of the regulator.
“The Central Bank of Kenya Act clearly demarcates the dos and don’ts for the board. Monetary policy, which is technical is exclusively reserved for the Monetary Policy Committee chaired by the governor. So practically speaking CBK has a dual board that is the main board which overseas governance issues and the MPC which focus on monetary policy. There is no case of overlap,” said Nyaoga.
For the latest on national news, politics, sport, entertainment and more follow us on Twitter and like our Facebook page!