On the Cheque Clearing System: Fix trust to fix the time problem

Recently, the Central Bank announced the deployment of a new system to facilitate the clearing of cheques in two days, rather than the four days it has taken in the past. I congratulate the Bank. We are making progress. But I couldn’t help noting that we can actually do better. It might help to revisit the mischiefs behind cheque transactions.

Cheques between account holders in the same bank are cleared on the same day, in some cases, almost instantly. The bank in issue bears all accounts and is able to verify with a few clicks of a mouse that the issuer in fact has funds to settle the obligation. This bank essentially is a facilitator whose dual role is to verify and complete the transaction. In this case, the mischief is whether an issuer has the funds to honor their obligation.

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Are Central Banks Being Overly Cautious with Crypto Currency?

Recently, the Governor of the Central Bank of Kenya issued a circular to Kenyan banks warning them against dealing with virtual currencies or entities dealing in digital currencies. Speaking to Kenyan Parliament’s National Assembly Committee on Finance, Dr. Njoroge recently said that crypto currencies are anonymous and lack central oversight, which makes them prone to money laundering and use for terrorist financing.

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