Me thinks the governor is clueless about banking or the economy or both. Why would a bank lend 50mn to Kenyans who may not b able to repay when they could lend the same to KenGen for 12% risk free?

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There are only two options,CBK tells Banks

New CBK rules may phase out cheques

The thicker the thigh the sweeter the pie.

Kizee- banks lend long-term and prefer to fund those loans with long-term deposits. Long-term deposits are requiring 12.5% to compete with similar returns from the growing bond market. Please fwd this to Ndungu who must have picked up his certificates from River Road.


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Kizee- note use of 'prefer' re long-term deposits. Its a universal preference.

www.mjengakenya.blogspot.com

To add on to managing the monetary policies with CRR,the Central Bank should also have a more realistic benchmark rate. The current CBR is just a rate that they keep announcing changes in rates,but it has not real effect (unless things have changed lately).

They should,for instance,change the CBR to be the repo/reverse repo rate for 1 week,or be the 3 months Tbill rate,which is issued on a weekly basis,and have a firm hand in managing the real credit and deposit rates in the market by quoting firm rates for the benchmarks. This way they may be able to manage liquidity and inflation.

The only problem I think CB faces is that they're ladden with increasing debts,and this may not give them enough muscle for this. (for instance they wish to reduce the benchmark rates,but at the same time theyre desparate for funds)

FWIW