{"id":270475,"url":"http://info.mzalendo.com/api/v0.1/hansard/entries/270475/?format=json","text_counter":362,"type":"speech","speaker_name":"Mr. Okemo","speaker_title":"","speaker":{"id":198,"legal_name":"Chrysanthus Barnabas Okemo","slug":"chrysanthus-okemo"},"content":"Thank you, Mr. Speaker, Sir. Let me continue to make my comments. First of all, there has been a lot of talk about the inter-bank rates and the discount window rate of the CBK. What I would like to do is to try and throw a little bit more light than has been done so far. The inter-bank rate is the window where commercial banks among themselves either lend to each other or borrow from each other. The rate that is determining the inter-bank rate is supply and demand among the banks. That is how that inter-bank rate is determined. However, the discount rate is a totally different animal. It is a window which is opened by the CBK whereby commercial banks go to the CBK to borrow as a lender of last resort. There is a formula for the inter-bank rate; it is not just done haphazardly. The rate which is charged in the discount window rate is the CBK rate plus the penalty. I can be able to prove from the same statistics which have been offered that, that is exactly how it was. In the whole of 2010, for example, the inter-bank rate was about 1 per cent. That is a reflection of demand and supply in the inter-bank rate. This means that because the banks were awash with liquidity there was no much need to trade on the inter-bank rate. That is why the rate is so low; one to one point something per cent. Mr. Speaker, Sir, during the same time the discount window rate was about 6 per cent which reflects the Central Bank of Kenya (CBK) rate plus the penalty. In fact, the rate was 6 per cent when the CBK rate at that time was 3 per cent and the penalty rate was 3 per cent. So, if you look at your table of all those rates for the---"}