Rwanda has enacted a new law governing the National Bank of Rwanda (BNR), introducing a legal mechanism requiring the State to recapitalise the central bank whenever its reserve funds are insufficient to absorb losses, a safeguard that did not exist under the previous legal framework. The new law, gazetted on July 24, 2026, replaces the 2017 law governing BNR, as amended, while retaining the provision establishing the central bank as a legal entity. ALSO READ: MPs approve relevance of bill reforming central bank operations According to the explanatory note accompanying the draft legislation, the overhaul followed recommendations from recent International Monetary Fund (IMF) Safeguards Assessments, including one conducted in 2024, which identified legal gaps in the previous framework and called for reforms to strengthen BNR's mandate, autonomy, governance, transparency and accountability. State recapitalisation becomes mandatory The most significant reform is the introduction of a statutory recapitalisation mechanism. ALSO READ: Parliament passes new Bill governing BNR The repealed law did not require the State to replenish BNR's capital if the central bank recorded losses beyond its reserve funds. Under Article 66 of the new law, where BNR's annual financial statements reveal a loss that cannot be fully absorbed by its reserve funds, the central bank must request the State to cover the outstanding amount. The State is required to transfer the funds within six months, either in cash or through interest-bearing securities issued at market rates with a fixed maturity date. ALSO READ: Govt moves to revamp operations of central bank to spur efficiency According to the explanatory note, the mechanism is intended to serve as an exceptional safeguard to ensure the central bank maintains adequate capital. Independence extended to officials The new law also broadens BNR operational independence. Previously, the law protected the independence of the institution itself. Article 4 now extends that protection to BNR's staff, agents and members of its decision-making bodies, providing that they shall not be subject to external interference from any person or institution when exercising their powers or performing their duties. The explanatory note said the amendment addresses a legal gap that left officials implementing the Bank's mandate without explicit statutory protection. An independent board The new law also reshapes the composition of BNR's Board of Directors. While the previous law provided for a smaller Board, the new legislation expands it from nine to 11 members comprising the Governor, the Deputy Governor and nine members appointed by Presidential Order on the basis of expertise in fields such as accounting, risk management, law and information technology. To strengthen the Board's independence, no more than 30 per cent of its members may be civil servants, excluding the Governor, Deputy Governor and members drawn from academia or research institutions. The law further bars the Governor and Deputy Governor from serving on Board committees. Board oversight powers protected The law also narrows the powers that the Board may delegate to the Governor. Although the Board may continue delegating functions such as issuing regulations and directives, Article 13 expressly prohibits it from delegating responsibility for overseeing the implementation of the Bank's general policy and management. The previous law did not clearly safeguard the Board's oversight role when delegation occurred. Leadership vacancies must be filled within 90 days The new law introduces timelines for filling vacancies in the Bank's leadership, addressing another gap in the previous legislation Article 22 requires vacancies on the Board of Directors to be filled within 90 days, while Article 24 gives the appointing authority the same period to appoint a new Governor or Deputy Governor whenever either office becomes vacant. According to the explanatory note, the measure is intended to ensure continuity in the Bank's governance. Audit Committee Another governance reform is the mandatory establishment of an Audit Committee. Under the repealed law, the Board could establish committees as it considered necessary, but no committee was specifically required. Article 23 of the new law now makes an Audit Committee mandatory, regardless of any other committees the Board may establish. Roles in currency management clarified The new legislation also clarifies the respective roles of the Presidency and BNR in currency management. As under the previous law, banknotes, coins and other forms of legal tender are established through a Presidential Order, while their withdrawal from circulation is also effected by Presidential Order. BNR's role is to manage the national currency on behalf of the State and advise on demonetisation. The clarification reinforces the distinction between the President's constitutional role as issuer of the national currency and BNR's operational role as its manager. Emergency lending framework revised The law retains BNR's role as lender of last resort while changing how emergency liquidity assistance will be regulated. Article 58 authorises the central bank to provide emergency liquidity assistance to solvent but temporarily illiquid financial institutions against adequate collateral, on a short-term basis and at a higher interest rate. However, while the explanatory note indicated that repayment timelines and other safeguards would be incorporated into the law itself, the enacted legislation leaves the duration, interest rate and other operational conditions to be determined through BNR directives. Auditor rotation period extended The new law also strengthens safeguards intended to promote auditor independence. Independent auditors continue to serve renewable one-year terms. However, unlike under the repealed law, an auditor who has served five consecutive years may not be reappointed until five years have elapsed after the end of the last term. The change is intended to reinforce financial transparency and accountability. Appeal proposal omitted from final law One proposal contained in the explanatory note did not make it into the enacted legislation. The draft bill proposed introducing a three-month time limit for appealing BNR decisions to prevent indefinite legal challenges. The enacted law, however, contains no such provision. Instead, Article 70 provides that BNR's regulations, directives and decisions remain enforceable unless suspended by a final decision of a competent court.
