Reserve Bank should be wholly state owned

05 July 2017 12:38 PM

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Reserve Bank should be wholly state owned

The recommendation was approved in a plenary session at the party’s policy conference in Johannesburg on Wednesday, said the people who were involved in the discussion and asked not to be identified because the decision hasn’t been made public.

Resolutions taken at the policy conference, which ends Wednesday, need to be ratified at the party’s national electoral conference in December.

The move opens a second front challenging the central bank’s established status just two weeks after South Africa’s Public Protector attempted to instigate a change in its mandate.

Busisiwe Mkhwebane instructed Parliament to amend the constitution to make the Reserve Bank focus on “socioeconomic well-being of the citizens” rather than inflation, prompting a drop in the rand as investors as viewed her action as a threat to its independence.

The Reserve Bank is one of a small coterie of global counterparts from Japan to Switzerland that has shareholders, a legacy of its foundation in 1921. Its investors have no say over policy or the appointment of the governor, but do vote to select seven of the central bank’s 10 non-executive directors.

“The net effect is zero but I think investors are on edge given that the mandate of the bank has been questioned and targeted in a very political way,” Rashaad Tayob, portfolio manager at Abax Investments in Cape Town, by phone. “People are conflating ownership of the Reserve Bank with control of it, which isn’t the case at all. But if you see this issue simmering up again, it shows the balance of policy is shifting away from the traditional framework.”


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