CENTRAL BANK OF KENYA
Opening Remarks by
PROF. NJUGUNA NDUNG’U
GOVERNOR
BREAKFAST MEETING FOR DOMESTIC FINANCIAL
SECTOR REGULATORS
The Sarova Stanley, Nairobi
Monday, August 31, 2009

Breakfast meeting CMA/CBK/RBA/IRA , August 31 2009
Hon. Deputy Prime Minister and minister for Finance
Board Members and Chief Executive Officers of RBA, CMA and IRA,
Distinguished Guests,
Ladies and Gentlemen:
1. It is my pleasure to be with you this morning and I am indeed honored to be
accorded this opportunity to give brief remarks at this important breakfast
meeting where the Domestic Financial Sector Regulators will be signing the
Memorandum of Understanding (MOU) on financial sector Collaboration.
2. At the onset, allow me to extend my gratitude to the Hon. Deputy Prime
Minister and Minister of Finance for agreeing to grace the ceremony and
deliver a key note address. In the same token, let me take this opportunity to
recognise the work of The Technical Committee on Collaboration which has
been instrumental in organising the event.
3. Ladies and Gentlemen, the Monetary Affairs Committee is a caucus of
Central Bank Governors under the East African Community Monetary Union
which is mandated, among others, to harmonize regulatory regimes and
supervisory frameworks in the region in the banking sectors. During the 12th
Monetary Affairs Committee (MAC) Governors’ Meeting held in Kigali,
Rwanda in May 2009, my fellow Governors and I celebrated the execution of
the MOU amongst the five Central Banks, which was put into effect in early
2009. It was indeed pleasing for Governors to note that the Bank of Uganda
had already signed an MOU with other domestic financial sector regulators in
Uganda. Other MAC Governors were therefore urged to implement a similar
arrangement with their respective domestic regulators by June 2010. This is
to demonstrate that collaboration amongst domestic regulators is in line with
regional aspirations. Consequently the celebrations that we mark today will
enable CBK achieve a milestone set by MAC Governors ahead of the set time
of June 2010. I cannot thank my fellow domestic regulators enough. But for
the Kenyan side, let me commend RBA and Edward Odundo for the time and
effort he has put on this initiative.

Breakfast meeting CMA/CBK/RBA/IRA , August 31 2009
4. As you are aware, there has been increased integration of economic and
financial markets globally. Globalization is creating new business
opportunities and opening new markets. However, the forces of globalization
and the ensuing competition are prompting financial companies to engage in
business operations that make group management and risk aggregation more
challenging. Similarly, a new concept of cross-ownership and trading is
emerging in our market, thus blurring sector boundaries and product lines.
For example, we have banks that want to offer bancassurance while insurance
companies are underwriting financial risks that were once a domain of
investment banks. As a result, it is becoming increasingly difficult for one
regulator to set up a regulatory regime without taking into consideration the
impact it bears on the other financial sub-sectors. In the same vein, we are
increasingly seeing banks acquiring brokerage firms in the capital market.
Harmonisation of regulatory regimes in the entire financial sector is therefore
critical in order to offer consistency and maintain financial stability.
5. The ongoing global financial crisis has only served to underscore the interlinkages of financial systems. The crisis has demonstrated that risks and
shocks that originate from one area can be transmitted internally within a
group or externally through converging products, markets or cross borders.
In this regard, financial sector regulators should base their supervision on a
consolidated basis by reviewing risks across the entire financial spectrum
rather than purely on an industry solo basis.
6. Ladies and Gentlemen, before I conclude my remarks, allow me, on behalf
of my fellow regulators, and on my own behalf, to express our sincere
gratitude to all the guests who responded to our invitation and set aside time
to grace this ceremony. I am sure also, the totality of the financial market will
appreciate this move by the regulators.
7. Finally, Ladies and Gentlemen, being aware of the task ahead of us, let me
take this opportunity to invite our chief guest to address this gathering.

Breakfast meeting CMA/CBK/RBA/IRA , August 31 2009
WELCOME DEPUTY PRIME MINISTER, HON. UHURU KENYATTA.