The South African Reserve Bank and the Course of the Economy

The role of the South African Reserve Bank in the country’s economy, past and present, comprises a range of traditional central banking functions performed continuously, but punctuated by decisive intervention at critical junctures. At such times the Bank is most clearly visible as an agent in our economic history. The establishment of the Bank itself in 1920 may be taken as an obvious first example. A clear need had arisen by that time for a central bank to regulate the note issue following the wartime inflation and to conserve the country’s stock of monetary gold. Other examples, from among many, are the momentous decision, urged on the government by the Bank, to maintain the gold standard in South Africa when the United Kingdom suspended it in September 1931; the Bank’s active part in the establishment of the National Finance Corporation in September 1949, which pioneered South Africa’s money market; and the imposition of deposit rate control in March 1965 which, together with attendant control measures, profoundly altered the channels of credit and the methods of financial intermediation during the next fifteen years.