President William Ruto has signed into law the Central Bank of Kenya (Amendment) Act, 2026, introducing major reforms aimed at strengthening the Central Bank of Kenya’s (CBK) ability to safeguard financial stability, enhance banking oversight and modernise the country’s monetary policy framework.
The new law establishes a separate legal framework distinguishing the Central Bank’s routine monetary policy operations from Emergency Liquidity Assistance (ELA). The reforms are expected to improve Kenya’s preparedness to respond to financial crises while protecting taxpayers and the banking sector.
Under the new provisions, emergency liquidity assistance will only be available to banks that meet strict conditions relating to solvency, viability and systemic importance. The law is intended to clearly separate ordinary liquidity management from extraordinary interventions during periods of financial distress.
The amendment also elevates financial system stability and sound banking regulation as secondary objectives of the Central Bank, while retaining price stability as its primary mandate. It formally recognises the CBK’s responsibility to promote the integrity, resilience and proper functioning of Kenya’s financial system.
To strengthen governance, nominees for the position of Deputy Governor will now be subject to vetting and approval by the National Assembly before appointment. The new requirement aligns the appointment process for Deputy Governors with that of the Governor and enhances parliamentary oversight of the institution’s senior leadership.
The law further gives statutory backing to the Central Bank of Kenya Institute of Monetary Studies, formally recognising the institution’s training mandate. It also provides a legal framework for collaboration with national, regional and international institutions to promote knowledge sharing and cross-border cooperation.
In addition, the legislation updates references in the Act by replacing the defunct Deposit Protection Fund Board with the Kenya Deposit Insurance Corporation, aligning the law with the current deposit protection framework.
The amendments also provide greater legal clarity on the CBK’s authority to deal in gold and other precious metals as part of the country’s reserve management strategy. The government says the move will support the growth of Kenya’s mining sector while aligning the country with practices adopted in countries such as Tanzania, Ghana and South Africa.
President Ruto also assented to the Parliamentary Pensions (Amendment) Act, 2023, which introduces reforms aimed at aligning the parliamentary pension framework with the Constitution and extending pension benefits to both Members of the National Assembly and the Senate.
The legislation updates the Parliamentary Pensions Act of 1983, which became outdated following the promulgation of the 2010 Constitution that established a bicameral Parliament. The new law formally recognises both Houses in the administration of parliamentary pensions and ensures senators qualify for benefits under the same framework as Members of the National Assembly.
Among the reforms, the law redefines a “child” for pension purposes as a person below the age of 18 years, up from the previous limit of 16 years, in line with the Constitution.
It also reconstitutes the Parliamentary Pensions Management Committee and the Appeals Committee to include representation from both the National Assembly and the Senate.
“To preserve public service pension policy, the amended law retains gratuity payments only for legislators who serve less than five years,” President Ruto said.
Email your news TIPS to Editor@Kahawatungu.com — this is our only official communication channel
