The Central Bank of Kenya (CBK) began its operation in Kenya, an East African country in 1966. It was formed through an Act of parliament, popularly referred to as the Central Bank of Kenya Act of 1966. Its establishment came about as a result of the need for the three East African states- Kenya, Uganda and Tanzania to work under independent monetary and financial policies. As a result, the East Africa Currency Board, that governed the three states collapsed in mid 1960s.
The board of directors of the CBK is mandated to determine the bank’s policy. The formulation of the monetary policy on the other hand is mandated to the bank’s Monetary Policy Committee. Central bank of Kenya’s board of directors is made up of the Governor who also acts as the chairman, the deputy Governor who also acts as the deputy chairman, the permanent secretary, a non-voting member as well as five other non-executive directors.
All members of the board are taken into service by the president and are expected to hold office for a term period of four years. Board members are entitled to reappointment but one can only hold office for a maximum period of two terms. Central Bank of Kenya headquarters is located in Nairobi, the capital city of Kenya. The bank has two other branches in major towns including Mombasa, Eldoret and Kisumu. CBK also owns Kenya’s only monetary studies institution- the Kenya School of Monetary Studies (KSMS).
CBK operates under various functional areas. These include monetary policy, notes and coins, bank supervision, treasury securities, publications and research, national payments system as well as deposit protection fund. It is mainly mandated to formulate and implement the monetary policy to attain and uphold stability in the overall heights of prices. CBK also fosters the solvency, liquidity and proper operation of an unwavering market based financial system.
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