President William Ruto has signed into law the Central Bank of Kenya (Amendment) Bill, 2026, ushering in sweeping reforms aimed at strengthening the Central Bank of Kenya’s ability to safeguard financial stability, enhance banking oversight, and modernise the country’s monetary policy framework.
The new law establishes a clear legal distinction between the Central Bank’s routine monetary policy operations and Emergency Liquidity Assistance (ELA), a move expected to improve Kenya’s preparedness to respond to financial crises while protecting taxpayers and the banking sector.
Under the amendments, ELA will only be available to banks that meet strict criteria on solvency, viability, and systemic importance. The reforms are intended to separate ordinary liquidity management from extraordinary interventions during periods of financial distress.
The legislation also expands the Central Bank’s mandate by formally recognising financial system stability and sound banking regulation as secondary objectives, while retaining price stability as its primary mandate.
The law reinforces the CBK’s role in promoting the integrity, resilience, and proper functioning of Kenya’s financial system.
In a move aimed at strengthening governance and accountability, nominees for the positions of Deputy Governor will now require vetting and approval by the National Assembly before appointment, aligning the process with that of the Governor and enhancing parliamentary oversight of the country’s monetary authority.
The amendments further provide statutory backing for the Central Bank of Kenya Institute of Monetary Studies, formalising the CBK’s training mandate and creating a legal framework for collaboration with national, regional, and international institutions to promote knowledge sharing and cross-border cooperation.
The law also updates the Central Bank Act by replacing references to the defunct Deposit Protection Fund Board with the Kenya Deposit Insurance Corporation, aligning the legislation with the current deposit protection framework.
Additionally, the amendments clarify the CBK’s authority to deal in gold and other precious metals as part of its reserve management strategy, a provision expected to support the growth of Kenya’s mining sector while aligning the country’s reserve management practices with those of Tanzania, Ghana, and South Africa.
In a separate development, President Ruto also assented to the Parliamentary Pensions (Amendment) Bill, 2023, introducing reforms designed to 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 had become outdated following the promulgation of the 2010 Constitution that established a bicameral Parliament.
The amended law formally recognises both Houses in the administration of parliamentary pensions, ensuring senators are entitled to benefits under the same framework as Members of Parliament.
Among the key changes, the law redefines a “child” for pension purposes as a person below the age of 18, up from the previous threshold of 16 years, bringing the definition into conformity with the Constitution.
The Act also reconstitutes both the Parliamentary Pensions Management Committee and the Appeals Committee to include representation from the National Assembly and the Senate, reflecting Kenya’s bicameral parliamentary structure.
To preserve the broader public service pension policy, the amended law retains gratuity payments only for legislators who serve for less than five years.
