Treasury scoffs at Central Bank weakening claims
The National Treasury has laughed off claims it plans to weaken the Central Bank of Kenya (CBK) by forming a new unit to regulate interest rates.
This comes in the wake of the Central Bank voicing its disapproval of the proposed Financial Markets Control Bill with fears it could be a subordinate to the Financial Markets Conduct Authority.
But according to Treasury Cabinet Secretary Henry Rotich, the new unit will operate more as a pro consumer agency, leaving the Central Bank with its supervisory role of the banking sector.
The Treasury boss strongly rejected claims that he plans to cut the banking regulator down to size, arguing other players in the banking sector did not hold a similar view.
“We don’t attack institutions, these are government agencies. I didn’t hear RBA is under attack. I don’t know if they have really read the bill and the current trend on how to handle market conduct so there is nothing unusual here, we are just bringing better standards into our system but you also know interests are also there,” Mr Rotich told Citizen Digital.
The apparent duplication of roles had Central Bank governor Dr Patrick Njoroge hot under the collar, stressing the bill and the proposed authority were an attack on the Central Bank.
According to the CBK boss, the bill was being used to cut the regulator to size due to actions it had taken in the industry recently.
“This is the financial sector equivalent of being asked to trade in your well serviced SUV for a ‘souped’ up Subaru. It may have flashy lights, a stabilizer at the back, noisy exhaust but it is still a Subaru. This is not time for hubris, it’s time for action. Make no mistake, CBK is under attack,” Dr Njoroge said at a briefing on May 30.
Mr Rotich however indicated that the Financial Markets Conduct Authority, once in place, would not interfere with the current regulatory works of agencies reporting to him.
He said the Treasury would welcome comments from the CBK as part of stakeholder engagement before the bill is sent to parliament for approval.
“We will have a regulatory system that is not viewed as it is miscatalog the work of the central bank or RBA or CMA or any regulator in the financial system because their job is to focus on prudential regulations,” he said.