SPECIAL FORUM ON MONETARY
POLICY WITH THE SOUTH AFRICAN RESERVE BANK
2 July 1998
Today, for the first time, the Nedlac constituencies were given
the opportunity to spend a full day session with the Governor ofthe
Reserve Bank, getting to grips with South Africa's monetary policy.
The Public Finance and Monetary Policy Chamber hosted the forum. It
was a challenging agenda, and the discussions were frank. Deputy
Governors Dr Chris de Swart and Mr. Timothy Thahane also took
part.
The topics on the agenda were as follows:
- Recent developments in emerging markets and implications for
South Africa
- The causes and general repercussions of the recent financial
market instability in emerging markets
- The measures taken by other countries towards preventing
negative impacts or addressing negative impacts
- The implications and impact of this instability on the South
African economy
- The options available to South Africa to address the negative
implications and impacts
- Interest rate policy and its impact on economic growth and job
creation
- The implications of current levels of real interest rates for
domestic savings, investment and the balance of payments, and hence
for economic growth and job creation.
- The "winners" and the "losers" of tight credit market
policies.
- The reasons for the shift to the Repo system and its
consequences for monetary policy
- Options and alternatives to the Repo system
- Appropriate targets for monetary policy, e.g. money supply,
credit growth, inflation, GDP growth and employment
- Exchange rate policy and its impact on economic growth and job
creation.
- The vision and goals underpinning exchange rate policy and the
mechanisms to achieve these goals, and in this regard, is current
policy aimed at a stable nominal rate or a stable real rate, as
well as current and future initiatives in respect of capital
account liberalisation.
- The extent to which exchange rate policy is helping to achieve
growth targets and job creation
- Institutional arrangements in respect of monetary policy
- Should the South African Reserve Bank be independent, and if so
then what should be the nature of its independence, i.e. goal
independence or instrument independence
- How can the South African Reserve Bank be made more accountable
to the public in order to ensure that independence is compatible
with democratic principles
- Is there a permanent role for outside experts in the
formulation and implementation of monetary policy
- Transformation of the SA Reserve Bank
- Financial market regulation
- What is the role of the South African Reserve Bank in bank
supervision and regulation
- What visions and goals underpin the current approach to
managing risks facing the overall financial system
- Does the South African Reserve Bank have a function as a lender
of last resort in the case of commercial bank failure, and what is
the process of accountability for actions of this sort
Dr Stals said that he welcomed the opportunity to interact with
the Nedlac constituencies, as this was part of the
Bank'saccountability to the broader public. Nedlac has agreed with
the Bank that there will be another session in six months time.
Issues to be tackled then could include the Bank's international
relations with groupings such as SADC, the IMF and World Bank;the
Bank's economic research programmes, and money market
operations.
Executive Director of Nedlac, Jayendra Naidoo,said that arising
out of the discussions, the Chamber could look at making input into
the thinking on international regulation of financial markets.
There also needed to be a discussion as to how the Nedlac
deliberations could link in with Parliament's portfolio committee
on finance.