By Ken Muthomi - Reporter
Kenya, July 6, 2026 - President William Ruto has signed into law the Central Bank of Kenya (Amendment) Bill, 2026, which is set to introduce new reforms aimed at strengthening the Central Bank's ability to enhance banking oversight and modernise the country's monetary policy framework.
According to the Head of State, the new law establishes a clear difference between the Central Bank's routine monetary policy operations and Emergency Liquidity Assistance (ELA), to improve the country’s response to financial crises while protecting taxpayers and the banking sector.
Under the new law, Emergency Liquidity Assistance will only be extended to banks that meet strict conditions relating to solvency, viability and systemic risk.
According to Ruto, this provision is intended to separate ordinary liquidity management from extraordinary interventions during periods of financial distress.
The law has also expanded CBK’s mandate by recognising financial system stability and sound banking regulation as secondary objectives of the Central Bank, while retaining price stability as its primary mandate.
“Assented to the Central Bank of Kenya (Amendment) Bill, 2026, ushering in sweeping reforms aimed at strengthening the CBK’s capacity to safeguard financial stability, improve banking oversight, and modernise the country’s monetary policy framework,” Ruto stated.
“The law formally recognises the CBK’s role in promoting the integrity, resilience, and proper functioning of Kenya’s financial system,” he added.
To improve the institution’s governance, the law will require nominees for Deputy Governor positions to be vetted and approved by the National Assembly before appointment, a process that will be in line with that of the Governor.
The amendment also gives statutory backing to the CBK’s training mandate through the Central Bank of Kenya Institute of Monetary Studies and also provides a legal framework for collaboration with other national, regional, and international institutions.
The law also updates references to the defunct Deposit Protection Fund Board, replacing them with the Kenya Deposit Insurance Corporation.
Furthermore, the provision clarifies CBK’s authority to deal in gold and other precious metals as part of its reserve management strategy. The government is optimistic that this will support the country’s mining sector and align the country with practices adopted in Tanzania, Ghana and South Africa.
On the other hand, the president has signed into law the Parliamentary Pensions (Amendment) Bill, 2023, which brings reforms that align the parliamentary pension framework with the Constitution and extend benefits to both Members of the National Assembly and the Senate.
“The legislation updates the Parliamentary Pensions Act of 1983, which became outdated after the promulgation of the 2010 Constitution established a bicameral Parliament,” Ruto stated.
“The new law formally recognises both the National Assembly and the Senate in the administration of parliamentary pensions and ensures senators are entitled to benefits under the same framework as MPs,” he added.
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