On Friday, June 9, the Central Bank of Kenya (CBK) released a report demonstrating how the 2019 demonetization of 1,000 Kenya Shilling notes affected the economy.
The decision to change the currency was informed by the need to address certain issues, such as combating inflation, cracking down on counterfeit money, and increasing revenue, according to CBK.
The report, signed by outgoing governor Patrick Njoroge, revealed that Retired President Uhuru Kenyatta’s directive yielded the expected results and met its goal.
According to the report, the exercise was completed within the four-month time frame, with the entire transition to the new notes taking place during that time.
Further, the report indicates that as seen in other countries, the exercise had no negative effects on the economy, as key macroeconomic indicators such as inflation and exchange rates remained stable.
It also reaffirms that the exercise had an impact on IFFs, as evidenced by the notes worth Ksh7.386 billion that were rendered worthless at the end.
This according to the report was due to noncompliance with the robust anti-money laundering (AML) and counter-terrorism financing (CFT) checks in place.
In accordance with the report, the exercise, which took place between June 1 and September 30, 2019, addressed concerns about illicit financial flows (IFFs) and the emergence of counterfeit banknotes, which threatened the currency’s integrity.
The Central Bank of Kenya explained that it was able to contain illicit financial flows, primarily funds derived from commercial tax evasion, criminal activity revenues, and public corruption.
