for the year ended december 2011. this was a 20. 4 % increase from ksh. 74. 3 billion ( usd895 million ) returned in the same period in 2010. the number of banks is growing to create strong banks : mergers will be required, but that is a market outcome. ladies and gentlemen : i would like to assure the banking sector and other market players that the central bank will continue to support the market development by providing an enabling environment for growth in the banking sector. allow me to outline the thrust of the initiatives we shall continue to inculcate to ensure the sector operates efficiently, effectively and soundly. the initiatives will be anchored on three pillars : first, strengthening financial stability, supervisory and regulatory framework. in particular, cbk will adopt a consolidated supervision approach to take cognisance of the growing pan - african nature of the kenyan banking sector. bis central bankers ’ speeches second, enhancing financial integrity in the banking sector so as to ensure that the financial systems are safeguarded against money laundering and financing of terrorism. third, promoting financial inclusion for financial deepening and development in line with the aspirations under the kenyan vision 2030. distinguished guests, ladies and gentlemen : finally, allow me once again to applaud firstrand bank limited for establishing a physical presence in kenya through a representative office. as the central bank we are ready to support you as you develop your business not only in the kenyan market but also on the eastern african side. with these remarks, it is now my pleasure to welcome honourable njeru githae, minister for finance of the republic of kenya to make his remarks and officially launch the representative office of firstrand bank here in kenya. thank you. bis central bankers ’ speeches

the central bank continues with its initiatives to modernize the national payments system. accordingly, from 1 october 2009, value capping was effected with all payments above kshs. 1 million being made through the real time gross settlement system ( rtgs ). this initiative enhanced the security and efficiency of high value payments. the celebrated mpesa falls under this category of reforms. as we have seen this market unfolding, mpesa account holders have soared to 9 million, total transactions surpassed ksh. 48 billion a month ( or averaging ksh. 1. 6 billion a day ) and agents increased to 17, 000 in the last 3 years. ladies and gentlemen ; on the monetary policy front, the cbk has observed that despite signalling efforts by the monetary policy committee to bring down the rates of interest by lowering the central bank rate ( cbr ), banks have not responded accordingly. further, the failure of the banking system to extend the maturity of their loan products is a consequence of the characteristic nature of their deposits which are largely short term, but also their assessment and pricing of risk. to support economic development, there is need for the development of banking products that support long term lending. these development banking products will play a significant role in influencing a downward trend in commercial banks lending rates. the central bank will therefore explore how development banking products can be introduced into the market to enhance the monetary policy transmission mechanism and lengthen the maturity profile of commercial bank term loans. developments in the bond market : the central bank has successfully raised funds for infrastructure development for the government through infrastructure bonds. these infrastructure bonds have not only facilitated financing of the government ’ s infrastructure program but also set the pace for the issuance of similar bonds by corporate entities such as kengen and safaricom. this, coupled with automated trading in the nairobi stock exchange will be important for a vibrant bond market. in addition, to deepen and widen the bond market, the central bank implemented the following measures : issuance of benchmark bonds : the bank together with market leaders forum adopted 2, 5, 10, 15 and 20 year maturities as benchmark bonds. this move has not only firmed up the yield curve, but has improved pricing, reflected through improved secondary market trading. reopening of benchmark bonds : this has increased trading activities in the secondary market. the shape and position of the yield : the vibrant bond market has led to a downward shift in the yield curve with an upward gentle slope reflecting stability. this has