Central banks are under pressure on two main fronts: easing of currency issuance and regulatory policies; and digital technology. A suggestion published last December was to print currency and ease regulatory policies to address the economic shock of the Covid-19 pandemic.
In Kenya, only the CBK has the power to issue currency. The suggested printing is the “helicopter drop” version of “quantitative easing” (QE) — a form of unconventional monetary policy in which a central bank purchases longer-term securities from the open market in order to increase the money supply and encourage lending and investment, itself an instrument of recent origin in major central banks of core industrial countries. It’s a roll of policy dice. Clarity would argue this high-risk advice would escalate Kenya’s weaknesses and struggles with economic policy.
