Author: Maryline Josephine

The gradual shift towards dollar payments in Kenya, observed across various sectors, has raised concerns about the intensifying trend toward the dollarization of the country’s economy. This movement has been fueled by the persistent weakening of the Kenyan shilling against the US dollar over the past year, showing little to no signs of improvement. Dollarization typically involves the need for a reserve of readily available US dollars to replace the existing monetary base and establish a liquidity cushion denominated in US currency. This cushion often amounts to approximately 20 percent of total bank deposits and serves as a safeguard against potential banking system crises or…