Conclusion

The findings in the book indicate that there is a need for the co-ordination of financial regulation, macro-prudential tools and the South African Reserve Bank (SARB) balance sheet tools to assist in the achievement of price, financial and macro-economic stability mandates. Evidence presented in the book shows that there needs to be a structural change in the composition of the SARB, Public Investment Corporation (PIC) and private banks’ balance sheets to facilitate, and in some instances to catalyse the achievement of the set objectives in the National Development Plan. The structural changes proposed in the book can take the form of: (i) the SARB balance sheet to conduct large-scale asset purchases (LSAPs) and using the PIC balance sheet to reinforce these effects; (ii) embarking on another long-term programme of foreign currency reserves accumulation policy to support the exchange rate policy and as a form of non-precautionary savings buffer to provide a stream of investment income to help finance part of the annual government budget, for intergenerational savings, or an endowment fund; (iii) lengthening the maturity of funding options for banks offered by the SARB to facilitate and loosen funding of important markets such as the housing sector and small-, micro- and medium-sized enterprises (SMMEs), and neutralise the impact of sterilisation and other costs associated with the forex reserves accumulation programme; (iv) curbing excess liquid asset holdings (LAH) by banks to release funding that has been disproportionately skewed towards funding the government as opposed to the private sector; and (v) dealing with the build-up of banks’ excess reserves created by the SARB policies so at to adopt the excess reserves tiering approach and an interest rate corridor floor that allows the central bank to separate the monetary policy stance from the liquidity management policy.