The Bank should be independent of finance capital, which exerts an inordinate amount of influence on economic activity
The debate over the mandate and role of the Reserve Bank continues to polarise opinion in SA, but it is a necessary debate that should move beyond the corridors of power to include workers and citizens, the real owners of the Bank.
Interest rates, perhaps the most influential prices in the economy, affect core areas of economic activity: aggregate demand, investment and inflation — thus workers’ purchasing power — and the sustainability of the public sector. The determination of monetary policy is therefore not a purely technical question but has profound implications for all aspects of economic life.
This call has been consistently ignored and dismissed by the Reserve Bank under the guise of protecting its independence. This despite the fact that even the most developed economies do introduce necessary temporary measures to prevent a mass exodus of capital during times of crisis or to protect their currencies.
This is worrying because the Bank is supposed to regulate the commercial banks and not pander to their whims. Banks are having their cake and eating it because they control the Reserve Bank. The poor are paying a huge price for this unholy and cynical alliance. The Bank has no appetite to impose quantitative controls on commercial banks to ensure that a portion of their loans go to priority sectors that drive the growth path and create jobs on a larger scale.
Currently the objective of monetary policy is to ensure price stability, fight inflation and protect the external value of the rand. With regard to price stability, this has been interpreted as low inflation. As a result, the Reserve Bank, mandated by the Treasury, has targeted inflation to be within the mystical range of 3%-6%.
South Africa Latest News, South Africa Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Namibia’s monetary policy diverges from SA’s as new bank governor starts workJohannes !Gawaxab who took the lead at Namibia’s central bank at the start of June
Read more »
Hawks and NPA to give details on VBS Mutual Bank arrestsInvestigative journalism unit amaBhungane says eight people were arrested early on Wednesday in a co-ordinated search-and-seizure operation
Read more »
World Bank provides $400 mln to boost health insurance in Egypt
Read more »
EFF insists leaders are clean, as Hawks swoop in arresting suspects linked to VBS Bank heistThe party said in a statement on Wednesday that it was pleased to hear of the arrests of individuals accused of bankrupting the bank.
Read more »
Hawks arrest top VBS Mutual Bank officialsThe suspects have been charged with 47 counts of various criminal offences.
Read more »
VBS Mutual Bank 'looters' arrested in Hawks raid — reportEight people linked to the looting and collapse of VBS Mutual Bank were nabbed during a search and seizure operation by the Hawks and the National Prosecuting Authority.
Read more »