This archive report was first published on 23 October 2019.
On September 30, 2019, the Central Bank of Kenya (CBK) successfully concluded the withdrawal of the old series Sh1,000 notes, a move that marked a significant step in the fight against corruption and illicit finance.
As the Governor of the Central Bank of Kenya, Dr. Patrick Njoroge, explained, the demonetisation was a response to the growing concerns of illicit transactions and financial flows in Kenya and the region, as well as the emergence of counterfeits.
The CBK had examined the experiences of other countries, including Australia, the European Union, Pakistan, the United Kingdom, and India, in designing the demonetisation strategy. The critical consideration was to balance the objective of addressing illicit financial flows and counterfeits while ensuring that the process was not disruptive to the public and the economy.
Four key elements underpinned the strategy: ample public awareness, quick provision and maintenance of the new currency, full application of Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT) measures, and a collaborative approach with other official entities.
Dr. Njoroge noted that the demonetisation was a single step in the fight against illicit finance and corruption, and that sustained efforts were needed to deliver victory. However, the strong AML/CFT filters that were applied will continue to be deployed, and the move has created a launch pad for progress towards using less cash for transactions as Kenya increasingly embraces mobile and electronic banking.
As of September 30, 2019, inflation, the exchange rate, and other key macroeconomic indicators remained stable, with no last-minute panic queues outside banking halls. Old series Sh1,000 notes valued at Sh7.4 billion had not been exchanged and became worthless.
Dr. Njoroge is the Governor of the Central Bank of Kenya.
