central bank of kenya institute of chartered accountants of barbados ( icab ) annual conference 2020 kenya ’ s digital transformation journey keynote address by dr. patrick njoroge governor, central bank of kenya thursday, november 12, 2020 as prepared for delivery good morning, good afternoon and good evening to you all! i am delighted to join you for this important conference, and i express my profound gratitude to the institute of chartered accountants of barbados ( icab ) for the invite. i want to believe that i have a strong connection to barbados and indeed the caribbean people, built over the years. i have fond memories of my visit to barbados in september last year, and the warm hospitality from my brother governor cleviston haynes of the central bank of barbados. but i believe we are just beginning a beautiful friendship — in the words of prime minister mia motley at kenya ’ s 56th jamhuri day celebrations, “ [... ] know in kenya that barbados is a second home for you. know in kenya, that the caribbean is your second home for you. know in kenya, that your brothers and sisters in the caribbean will stand together with you for those causes that unite us, because our values are similar. ” we had the honour of hosting the prime minister during her state visit to kenya last december. as part of her visit, the central bank of kenya organised an exhibition entitled “ fintech in the savannah ” where the prime minister interacted with innovators from kenyan banks, telecommunication companies and fintech companies. i was amazed at the prime minister ’ s high - level ownership of potential innovations in barbados. at one point a young fintech, kwara, caught her attention. kwara has developed a solution that enables savings and credit unions ( saccos ) — or credit unions as they are referred to in barbados — to digitize their operations through a subscription cloud - based solution without having to acquire expensive new software and hardware. this would facilitate saccos ( or credit unions ) to move quickly into the digital age, while serving their mostly rural customers. this innovation immediately clicked with the prime minister, given the challenges faced by credit unions in barbados and the potential positive impact on the population, and she immediately invited kwara to barbados. yes, prime minister, we will send our best and brightest! the year 2020 has been truly extraordinary, defined by the covid - 19 pandemic, and the death and destruction it has wrought. lives and livelihoods have changed dramatically in a

process. and we know very well that even long - standing “ model pupils ” have to take care to see that their marks remain good. but i believe the dutch are sufficiently self - assured to be able to cope with praise, too. it is the ability to adjust flexibly that determines “ the ascent and decline of nations ”, and thus their currencies as well. the example of the netherlands, in particular, shows that an internally and externally hard currency helps to create jobs. admittedly, the political will to effect domestic adjustments, and the social consensus that they should be carried out, are also essential. the erstwhile pegging of the guilder to the d - mark has long since given way to coexistence on equal terms. nowadays it is not unfair to ask whether the guilder has not meanwhile itself become the new anchor currency in europe. in a sense it has, at any rate jointly with the d - mark. there are two reasons why the netherlands has been able to assume this role of the guilder as the “ co - anchor ” in the erm : - first of all, an economic reason : the markets see that the dutch are not dependent on importing their stability through the exchange rate link. their “ stability culture ” stands firmly on its own feet. - and secondly, a political reason : the netherlands has played a crucial part in ensuring that the erm exists at all in its present shape. this is because a critical situation arose in the summer of 1993, under the impact of upheavals in the erm. in the monetary “ summer gales ” of those days, it was suggested at times that germany should be relegated to the status of a spectator. but the dutch refused to unpeg the guilder from the d - mark. and the other member states then felt that the erm was of no particular interest without those two. the unambiguous stance of dutch economic and monetary policy is paying dividends. today dutch interest rates are below german rates, at both the short and the long end of the market, despite the slight increase in the last few days. whether de nederlandsche bank is already the actual “ interest - rate leader ” in europe is a question i would rather leave open. true, we at the bundesbank know that we cannot, and do not wish to, permit ourselves any signs of laxity. but for the time being we do not think that the turning point for