The Reserve Bank’s latest Financial Stability Report flagged the biggest risks to South Africa’s financial stability – and what needs to be done to avoid them.
Escalating geopolitical tensions, persistent inflation, weak fiscal positions, high government debt, rising debt-service costs, financial sector exposure to sovereign debt, and load shedding are some of the key global and domestic risks to South Africa’s financial stability.
It includes the identification and assessment of risks to financial stability for the next 12 months, as well as a summary of actions taken by SARB and financial sector regulators to address risks and vulnerabilities. The Reserve Bank’s assessment of risks and vulnerabilities is communicated through their Risks and Vulnerabilities Matrix .If mitigative measures are in effect and the financial system is robust enough to handle shocks without widespread impact, the risk of vulnerability is lower. Conversely, with few or no measures in place, the risk of financial instability increases.
While the South African financial system faces several risks to financial stability, the Reserve Bank says that progress has been made to reduce the vulnerability of the domestic financial system against the key risks highlighted by increasing its robustness.
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