President William Ruto has signed into law the Central Bank of Kenya (Amendment) Act, 2026, introducing sweeping reforms aimed at strengthening financial stability, improving banking oversight, and modernising the country’s monetary policy framework.
The new law creates a separate framework for emergency liquidity assistance, expands the CBK’s mandate, and enhances parliamentary oversight in the appointment of deputy governors.
The amendments to the Central Bank of Kenya (CBK) law introduce significant changes to how the country manages financial stability and responds to risks within the banking sector.
Among the key reforms is the creation of a distinct legal framework separating routine monetary policy operations from Emergency Liquidity Assistance (ELA), a mechanism used to support financial institutions facing severe liquidity difficulties.
The move is intended to improve Kenya's preparedness in responding to financial crises while protecting both taxpayers and the wider banking system from undue risk.
Under the amended law, emergency support will only be extended to banks that meet strict conditions on solvency, viability and systemic importance.
The reform seeks to ensure that normal liquidity management operations remain separate from extraordinary interventions during periods of financial distress.
Another major provision formally elevates financial system stability and sound banking regulation as secondary objectives of the Central Bank, while retaining price stability as its primary mandate.
The law also recognises the CBK's role in promoting the integrity, resilience and proper functioning of Kenya's financial system.
Changes have also been introduced in the governance structure of the institution.
Nominees for Deputy Governor positions will now undergo vetting and approval by the National Assembly before appointment, aligning the process with that of the Governor and strengthening parliamentary oversight of senior leadership at the monetary authority.
The legislation further gives legal backing to the Central Bank of Kenya Institute of Monetary Studies, strengthening the institution's training role and creating a framework for collaboration with national, regional and international institutions.
The amendments additionally replace references to the former Deposit Protection Fund Board with the Kenya Deposit Insurance Corporation, bringing the Act into line with the country's current deposit protection structure.
The law also broadens legal clarity on the CBK's authority to deal in gold and other precious metals as part of reserve management, a move officials say could support Kenya's mining sector while aligning the country with practices in Tanzania, Ghana and South Africa.
President Ruto also signed the Parliamentary Pensions (Amendment) Act, 2023, introducing changes designed to align the pension framework with the Constitution and Kenya's bicameral parliamentary structure.
The new legislation updates the Parliamentary Pensions Act of 1983, which predated the 2010 Constitution that established the National Assembly and Senate as separate houses of Parliament.
Under the amended law, senators will now formally receive pension benefits under the same framework as members of the National Assembly.
The legislation also redefines a "child" as a person below the age of 18, up from the previous threshold of 16 years, in line with constitutional provisions.
In addition, the Parliamentary Pensions Management Committee and Appeals Committee will now include representation from both Houses.
The amended law retains gratuity payments only for legislators serving less than five years, preserving existing public service pension policy.