Regulatory Alerts2016-07-13
Banking Circular No 3 of 2011 - Implementation of East African Cross-Border Payment System
The Central Bank of Kenya, in collaboration with other East African Partner States' central banks (Bank of Tanzania, Bank of Uganda, National Bank of Rwanda and Banque de la Republique du Burundi), has adopted a multi-currency model called the East Africa Cross Border Payment System (EAPS) to facilitate clearing of cross-border payment instruments for efficient trade within the East African region. The model has several key features: 1. It uses the currencies of the partner states, with no currency conversion within the system. Customers and their banks will agree on exchange rates and obtain foreign exchange outside of the central banks. 2. EAPS connects the existing RTGS systems of the partner states' central banks and is designed to affect payments against pre-funded settlement accounts in the currencies of the partner states. 3. Commercial banks are required to execute and return an East Africa Cross Border Payment & Settlement System Participation Agreement to the Central Bank of Kenya, outlining contractual commitments and operational rules and procedures for participation.