CBK Proposes Stricter Liquidity Requirements for Banks to Strengthen Financial Stability

The Central Bank of Kenya (CBK) has proposed higher liquidity requirements for banks to better manage financial stress. Banks will need to maintain liquidity above the current 20% threshold to ensure they can meet withdrawal demands during crises. This move follows social media rumors of a cash crunch, which the CBK and banking leaders dismissed, pointing to an industry liquidity average of 51% in 2023.

The new guidelines also require banks to manage liquidity risks in individual currencies and adopt a net stable funding ratio to reduce reliance on short-term funding, bolstering the resilience of Kenya’s banking system.