Kenya unveils new currency banknotes with a demonetization shock

The President of Kenya unveiled new generation currency notes at the 2019 Madaraka Day Celebrations in Narok on June 1.

This was after a speech by the Governor of the Central Bank and comes after a case last year cleared the way for bank notes to be printed and also a few months after new coins had been unveiled. The Governor mentioned that there had been extensive public participation in the process which led to the themes of green energy, agriculture, social services, tourism and governance (an image of Parliament!) on the new notes.

The Governor also mentioned that Central Bank had observed that the Kshs 1,000 note (equivalent to about $10) was being used to illicit financial flows and is being counterfeited. They had therefore moved to withdraw the old Kshs 1,000 notes by October 1, 2019, after which they will no longer be legal to use.

Going by the recent wave of a government moves in Kenya, we can probably expect a few challenges to the decision in the Courts and Parliament that will delay the new notes rollout over issues like:

  • The image of a statue of the First President of Kenya remains prominent on every new note.
  • On the demonetization of old 1,000 shilling notes, Parliament’s Committee on Delegated Legislation will say that it should have approval over such a radical move.

EDIT  On Tuesday, June 3, the Governor of the CBK held a press conference where he announced modalities for the transition to the new currency which is already being issued to commercial banks:

  • Persons exchanging currency notes for amounts not exceeding Ksh.1 million of the withdrawn currency notes will exchange at their Commercial banks, CBK Branches and Currency Centres, or any nearest commercial bank. 
  • Bank customers exchanging currency notes for amounts Ksh.1 million to Ksh.5 million of the withdrawn currency notes will exchange at their respective commercial banks, under the normal procedures and requirements. 
  • Persons without bank accounts exchanging currency notes for amounts exceeding Ksh.1 million will require an endorsement from CBK. 
  • Persons exchanging currency notes for amounts exceeding Ksh.5 million (bulk exchange) will require an endorsement from CBK.

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