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Editorials

EDITORIAL: Protect Kenyans during new currency transition

Central Bank of Kenya (CBK) Governor Patrick Njoroge displays some of the new look Kenyan currency notes on June 3, 2019 during a press conference at his office in Nairobi. AFP PHOTO | SIMON MAINA 

The Central Bank of Kenya (CBK) has triggered panic following last Saturday’s release of new bank notes and the announcement that it intends to invalidate all the Sh1,000 notes currently in circulation by October 1.

The political protests and legal challenge to the move are understandable given that CBK kept its plan away from the media, and even high ranking government officials until the last minute.

It is, however, worth noting from the onset that CBK took some steps to minimise citizens’ pain.

The banking sector regulator not only allowed other old paper notes to continue circulating alongside the new ones, but also gave a 122-day notice in an effort to make the demonetisation of Sh1,000 notes less dramatic.

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Questions have been raised about the legality of the changes, and even suits filed in courts to that effect.

However, the Madaraka Day pronouncement becomes one of the most profound administrative measures ever to be taken in a bid to mop up illicit cash in the economy.

Without doubt, the drastic move targets hoarders of illicit cash that include the corruption, counterfeiters, terrorist networks and tax evaders.

The CBK estimates that some Sh217.6 billion are stashed in people’s houses, mostly in bills of Sh1,000 notes, and has since directed those seeking to exchange them for new notes to do so at its branches if they hold more than Sh5 million.

If it is true that people are hoarding illicit cash, it is natural to suspect that crafty holders will avoid exchanging their old bills directly at established financial institutions for fear of being exposed.

But most of them will still make good use of the three-month window to invent new ways of getting the ill-gotten wealth back into the financial system.

That’s why CBK and other investigative agencies must spread their reach to ensure Kenyans are adequately protected during the three-month currency transition period.

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