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How CBK fought and Lost the Inter-banking Lending Market Wars
Rank: Chief Joined: 3/24/2010 Posts: 6,779 Location: Black Africa
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Cde Monomotapa wrote:Even Wanjiku knows it takes rain to grow food in Kenya. She is doing better than a lot pple posing as " Kenyan investors" on Wazua.  CBK should hire 'Rain' from MK4 GOD BLESS YOUR LIFE
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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youcan'tstopusnow wrote:Cde Monomotapa wrote:Even Wanjiku knows it takes rain to grow food in Kenya. She is doing better than a lot pple posing as " Kenyan investors" on Wazua. CBK should hire 'Rain' from MK4 Or Storm from X-men.
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Rank: Chief Joined: 3/24/2010 Posts: 6,779 Location: Black Africa
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We can only wait for Q4... GOD BLESS YOUR LIFE
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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Kaykay wrote:@Cde, that is a valid point regarding the rains.
On another note the CBK says that it is trying to drive the agribusiness in attaining food sufficiency and VISION 2030, should they try and encourage banks to come up with tailor made products to support agriculture and other economic drivers such as tourism? Is it possible? Haha...there is so much the commercial banks can be told. They'll always direct credit to "viable/productive" sectors (share-holder demands) but that's where parastals like AFC (Agric.Fin.Corp) are to come in but err...yah..they are not being effective.
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Rank: Member Joined: 9/29/2010 Posts: 679 Location: nairobi
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Kaykay wrote:@Cde, that is a valid point regarding the rains.
On another note the CBK says that it is trying to drive the agribusiness in attaining food sufficiency and VISION 2030, should they try and encourage banks to come up with tailor made products to support agriculture and other economic drivers such as tourism? Is it possible? CBKs role is price stability and top defend the value of the KES, vision 2030 related agendas fall under the vision 2030 secretariat
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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@Cde - As long as CBK doesn't have a mechanism to mop up those printed papers it flooded the market with last year in form of econ stimulus, inflation rates will remain high like a kite and above their 5% target. Rains will offer supply-side inflation relief, but how do they fix the volatile exchange with poor fiscal mechanisms? $15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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NB: It is still a requirement by CBK that banks present their FX transactions books for scrutiny before qualifying at the discount window. In my opinion, and to summarise, I think the CBK is pointing to a return to fundamental banking i.e go out marketing, gather deposits and make loans (currently only KCB & Equity are visibly doing so). No more sky-larking and speculating (FX) at the expense of the greater economy. If this calls for a sector consolidation, then so be it.
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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hisah wrote:@Cde - As long as CBK doesn't have a mechanism to mop up those printed papers it flooded the market with last year inform of econ stimulus, inflation rates will remain high like a kite and above their 5% target. Rains will offer supply-side inflation relief, but how do they fix the volatile exchange with poor fiscal mechanisms?
Drying up domestic KES liquidity can always be done and the banks have had a taste of that at 26%. Wish we had an FX printer but since we don't only longterm solutions of import substituition will help. Geo.thermal, gasohol, irrigation and a mega BPO park to rake in the FX.
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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I think to be fair the issue is being clouded. Inflation may be imported or supply side, I don't argue, but I think the issue on hand is the CBK handling of matters. A lame duck approach early on led to rampant speculation, mostly by banks CBK cannot discipline. A total turnaround then occurred, and draconian measures came next, which caused the liquidity crunch. Now, this has been replaced with opacity, as in no one knows how the window rate is measured...followed by a bit more confusion, like selling tiny amounts of forex in the market yesterday. Too much confusion reigns. What would be desirable is stability, a serious, mature, non-academic approach to matters. Remember, you can defend either your currency, or your interest rates, but not both! Make a choice, and stick to it. Business opportunities are like buses,there's always another one coming
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Rank: Member Joined: 9/29/2010 Posts: 679 Location: nairobi
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KulaRaha wrote:I think to be fair the issue is being clouded. Inflation may be imported or supply side, I don't argue, but I think the issue on hand is the CBK handling of matters.
A lame duck approach early on led to rampant speculation, mostly by banks CBK cannot discipline. A total turnaround then occurred, and draconian measures came next, which caused the liquidity crunch.
Now, this has been replaced with opacity, as in no one knows how the window rate is measured...followed by a bit more confusion, like selling tiny amounts of forex in the market yesterday.
Too much confusion reigns. What would be desirable is stability, a serious, mature, non-academic approach to matters.
Remember, you can defend either your currency, or your interest rates, but not both! Make a choice, and stick to it. well said brother
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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Rank: Member Joined: 1/3/2011 Posts: 129 Location: Nairobi
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KulaRaha wrote:I think to be fair the issue is being clouded. Inflation may be imported or supply side, I don't argue, but I think the issue on hand is the CBK handling of matters.
A lame duck approach early on led to rampant speculation, mostly by banks CBK cannot discipline. A total turnaround then occurred, and draconian measures came next, which caused the liquidity crunch.
Now, this has been replaced with opacity, as in no one knows how the window rate is measured...followed by a bit more confusion, like selling tiny amounts of forex in the market yesterday.
Too much confusion reigns. What would be desirable is stability, a serious, mature, non-academic approach to matters.
Remember, you can defend either your currency, or your interest rates, but not both! Make a choice, and stick to it. SPOT ON!
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Rank: Member Joined: 9/29/2010 Posts: 679 Location: nairobi
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professor ndungu? its a pleasure to have u on wazua
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Rank: Member Joined: 4/2/2011 Posts: 629 Location: Nai
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This is one of the best debates to ever occur on Wazua with participants defending their positions with good arguments. No wonder the usual jokers and name callers have opted out.
My 2 cents, the CBK opted for short term measures which the banks had foreseen and strategised for. Additionally, some of the players may have enjoyed information assymetry (known for sure what measures the CBK was going to take). Complete openness or extreme secrecy is necessary for effective policy setting.Strategic direction is also important.
I sense a CBK that is unable to choose between economic growth and price stability.
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Rank: Veteran Joined: 11/21/2006 Posts: 1,590
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I think there is definitely confusion in the CBK office. Its core mandate is controlling inflation. It has secondary mandate to support economic growth. I think the secondary mandate is far too broad and unfocused such that when you get a weak governor; rising inflation (driven by a combination of demand and supply factors) economic growth threatened by external factors, CBK becomes like that hyena that was caught by two smells at road junction. This economy really misses Daudi Mwiraria who despite his liking for a brown envelope or two knew monetary like the back of his hand... Sehemu ndio nyumba
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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kizee1 wrote:professor ndungu? its a pleasure to have u on wazua LoL!! How do U like my signature on the bank notes ;-) it's been an exciting thread indeed @accel
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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Maybe I should apply for the position of "OFFICIAL GOVT. ECONOMIC SPOKESMAN - WAZUA" too. Naomba hii serekali.
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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Cde Monomotapa wrote:Maybe I should apply for the position of "OFFICIAL GOVT. ECONOMIC SPOKESMAN - WAZUA" too. Naomba hii serekali. With the way things are deteriorating, there's going to be an opening high up in CBK soon, so you can even apply for that job! Business opportunities are like buses,there's always another one coming
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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KulaRaha wrote:Cde Monomotapa wrote:Maybe I should apply for the position of "OFFICIAL GOVT. ECONOMIC SPOKESMAN - WAZUA" too. Naomba hii serekali. With the way things are deteriorating, there's going to be an opening high up in CBK soon, so you can even apply for that job!
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Rank: Chief Joined: 1/3/2007 Posts: 18,101 Location: Nairobi
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Or CBK Governor should use the tried & tested method. Blame KenolKobil Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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How CBK fought and Lost the Inter-banking Lending Market Wars
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