CENTRAL BANK OF KENYA
Remarks by
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Central Bank of Kenya
Monday, August 8, 2011

Mr. Rundeersing Bheenick, Governor of the Bank of Mauritius;
Members of the Press;
Colleagues;
Ladies and Gentlemen;
I am privileged to welcome Governor Rundheersing Bheenick of the Bank of
Mauritius to Nairobi and to the Central Bank of Kenya.
Governor, we thank you for making the time to be here at this auspicious
occasion and trust that you are having a pleasant stay so far.
Ladies and Gentlemen: Today’s event is a monumental one in that it marks
the establishment of formal supervisory relations between the Central Bank of
Kenya and the Bank of Mauritius.
We began the process of establishing formal cooperation between the Bank of
Mauritius and the Central Bank of Kenya in 2009 and today’s signing of the
Memorandum of Understanding between the Bank of Mauritius and the
Central Bank of Kenya will be a culmination of that process. The MOU is
premised on the need to enhance cooperation in the sharing of supervisory
information between our two institutions. It will help define and guide our
working relationships in addition to enabling the smooth exchange of
supervisory information between us.
One Kenyan bank (I & M Bank) has already established a presence in
Mauritius while other banks are also considering exploring opportunities in
Mauritius. Similarly, banks from Mauritius have direct and indirect
commercial relations with our Kenyan institutions.
Ladies and Gentlemen: The global financial crisis has reinforced the
importance of effective dialogue and collaboration between banking
supervisors. Indeed, one of the biggest lessons learnt from the financial crisis
has been the need for better regulation of financial institutions. The crisis has
also provided an abundance of examples highlighting the importance of
supervisory cooperation. As a result, a key initiative of the Basel Committee on
Banking Supervision has been to recommend enhanced promotion of
cooperation between supervisors globally in order to facilitate an efficient
exchange of information.

Such coordination and communication is the basis for promoting robust risk
management practices and developing sound supervisory standards. Crossborder cooperation is a prerequisite for establishing effective resolution
techniques for systemically important banks having cross-border operations.
It is therefore apparent that it is no longer possible for any one regulator to
adequately supervise institutions that operate across the globe, hence
cooperation among regulatory authorities is essential. As Regulators, we need
to encourage and support transformation and innovation through better
regulation instead of looking for avenues of more regulation. As per Sir
Andrew Crockett, better regulation is a regime that:
Can readily identify weaknesses and emerging vulnerabilities;
Is capable of analyzing risks and adequately addressing pricing risks;
Provides appropriate incentives (penalties) to induce prudent behavior in
the market place;
But also to add in our case, the regulator is an agent of market
development.
Better regulation encourages innovation and strong institutions to develop in
the economy.
Cross border banking has its opportunities and challenges. As regulators, it is
in our mutual interest to ensure the soundness and stability of our respective
financial sectors. We should therefore play our rightful role in ensuring
effective supervision of banking entities operating in our respective
jurisdictions. We should also ensure that any systemic risk that may be posed
by one bank operating in another jurisdiction is mitigated and promptly
brought to the attention of the home regulator. The MOU which we are signing
today will thus enable us share a wide range of supervisory information on a
more defined framework.
Ladies and Gentlemen; Both Mauritius and Kenya are leading
international hubs. Mauritius is a renowned international financial centre for
its offshore financial services. Likewise, Kenya, because of its leadership in
mobile money transfer services, is now referred to as the Silicon Valley of
Africa. We can both learn from each other and share our respective
experiences so as to increase the competitiveness of our markets as well as our
financial institutions. The signing of this MOU will therefore set forth a

pragmatic approach for cooperation and the sharing of supervisory
information. We accordingly look forward to building on the existing good
relations between the Central Bank of Kenya and the Bank of Mauritius and to
a future of enhanced supervisory cooperation.
I now invite Governor Bheenick to make some remarks before we proceed to
sign the MOU.
THANK YOU