A central bank’s credibility can’t be divorced from its mandate — so mess with the status quo at our peril.
A central bank’s credibility can’t be divorced from its mandate - which is why calls for changes have unnerved investorsReserve Bank governor Lesetja Kganyago. Picture: FREDDY MAVUNDA
The Bank has been one of the few institutions in SA that can be regarded as being highly reputable. Reserve Bank governor Lesetja Kganyago has previously been named the world’s central banking governor of the year. And both the president and the finance minister have reassuringly indicated that the independence of the Bank is not under threat. After all, central bank independence is often viewed as necessary to prevent political meddling.
Still, it’s worth interrogating the two issues raised by the Bank’s detractors — namely nationalisation of the central bank and changes to its mandate to better meet the needs of the economy, including a focus on job creation. Unfortunately, the official reassurances about the Bank’s independence, from the president and the finance minister, have done little to calm nerves, because comments about mandate changes are alarming to international as well as local investors — not least because these are surfacing primarily via unsupported comments in the public domain. A central bank’s credibility is hard won over time through its actions.
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