Central Bank of Kenya Publishes Foreign Exchange Code Amid Plans to Re-introduce...

Commercial banks have been notified by the Central Bank of Kenya (CBK) about the launch of a new Kenya Foreign Exchange Code (FX Code).

The President of Kenya, William Ruto, has expressed his optimism following this direction saying this will help ease the current dollar shortage in Kenya.

President of Kenya talks easing dollar shortage in Kenya and the re-introduction of the interbank FX market to resolve the problem of a parallel markethttps://t.co/qBrZEcH3Pd pic.twitter.com/zirRZEJWyy

— BitKE (@BitcoinKE) March 27, 2023

“The code sets out standards for commercial banks, and aims to strengthen and promote the integrity and effective functioning of the wholesale foreign exchange (FX) market in Kenya,” a statement by CBK reads in part.

“It will facilitate better functioning of the market, reinforcing Kenya’s flexible exchange rate regime for greater resilience of the economy,”

The FX Code is organised around six leading principles:

• Ethics – Market participants are expected to behave in an ethical and professional manner to promote the fairness and integrity of the FX market

• Governance – Market participants are expected to have a sound and effective governance framework to provide for clear responsibility for and comprehensive oversight of their FX Market activity and to promote responsible engagement in the FX market

• Execution – Market participants are expected to exercise care when negotiating and executing transactions to promote a robust, fair, open, liquid, and appropriately transparent FX Market

• Information Sharing – Market participants are expected to be clear and accurate in their communications and to protect confidential information to promote effective communication that supports a robust, fair, open, liquid, and appropriately transparent FX market.

• Risk Management and Compliance – Market participants are expected to promote and maintain a robust control and compliance environment to effectively identify, manage, and report on the risks associated with their engagement in the FX market

• Confirmation and Settlement Processes – Market participants are expected to put in place robust, efficient, transparent, and risk-mitigating post-trade processes to promote the predictable, smooth, and timely settlement of transactions in the FX market

“Market participants will be required to conduct a self-assessment and submit to the CBK a report on the institution’s level of compliance with the FX Code by April 30, 2023,” said the Central Bank.

The code comes into immediate effect.

The Central Bank announced the code on the same day that President William Ruto revealed that his government is working with the central bank to revive the inter-bank foreign exchange market.

According to a Reuters report, the inter-bank market for hard currency has turned dormant in recent years due to what traders said was aggressive policing by the central bank which made it difficult to do deals.

The absence of a thriving inter-bank foreign exchange market has been cited as one of the causes of a severe shortage of foreign currency which has compelled the government to request extended credit terms for vital imports such as petroleum.

This situation has also resulted in the emergence of a parallel market where money changers offer a foreign exchange rate that differs from the official central bank rate resulting in a discrepancy of approximately 10%.

_______________________________________

Follow us on Twitter for the latest posts and updates

Join and interact with our Telegram community

_______________________________________

_______________________________________

Leading South African crypto exchange, Luno, says the CEO is stepping aside and handing the reins to its head of operations. James Lanigan, Luno’s Chief Operating Officer, will take over as the new CEO, while Marcus Swanepoel, the current CEO, will become executive chairman.

This move comes as Luno’s parent company, Digital Currency Group (DCG), a crypto-focused venture capital firm, continues to grapple with turmoil in the crypto market. Luno recently laid off 35% of its global workforce citing market turbulence as the reason.

Founded in 2013 by South African former banker, Marcus Swanepoel, Luno aimed to bring crypto to the masses. Swanepoel has been CEO for 10 years and will now focus on guiding strategy and broadening Luno’s investor base in his new role as executive chairman.

Swanepoel said:

“Co-founding and serving as the CEO of Luno for the past ten years has been the greatest honour of my career and I’m excited for our next chapter as we continue to put the power of crypto in everyone’s hands.

The opportunity for crypto is bigger and brighter than ever, and James is a seasoned operator and an outstanding leader with a track record of success across all aspects of running a truly global fintech business. I have the utmost confidence that James will continue to deepen our trust with customers and key stakeholders alike, driving both Luno’s business and the industry forward.”

Luno has reportedly hired investment banking firm, Canaccord Genuity Group, to help it raise new investment from outside investors. This marks the first time the company is opening up to new investors since being acquired by DCG in 2020. The company intends to raise money from investors other than DCG to help it expand internationally, gain market share, and prepare for an eventual listing, according to the press release.

DCG, Luno’s parent company, has been dealing with the ongoing fallout from last year’s plunge in token prices and the collapse of FTX whose failure in November 2022 sparked a series of bankruptcies in the industry.

Within DCG’s portfolio of crypto holdings, digital currency lender, Genesis, filed for bankruptcy protection owing creditors at least $3 billion, while Grayscale, the largest crypto asset management firm, faces questions over its exposure to FTX and the widening discount its bitcoin investment trust trades at relative to the underlying asset.

CoinDesk, the DCG-owned crypto news outlet, has also hired an investment bank called Lazard to explore a potential sale, reports indicate.

A DCG spokesperson insisted Swanepoel’s job move was unrelated to the difficulties faced by Luno’s parent company and had been in the works for 12 months. The spokesperson added that transitioning from CEO to executive chairman is a ‘common path for founder CEOs.’

Since its founding in 2013, Luno is one of the leading crypto exchanges in Africa with over 11 million users in over 40 countries.

_____________________________________

Follow us on Twitter for the latest posts and updates

Join and interact with our Telegram community

_____________________________________