The South African Reserve Bank (SARB) is the central bank of South Africa, responsible for conducting monetary policy, ensuring financial stability, and overseeing the country's banking and financial systems. Established in 1921 under the Currency and Bank Act of 1920, the SARB is the oldest central bank in Africa and operates as an independent institution within the framework of the South African Constitution.
The primary objectives and functions of the South African Reserve Bank include:
- Monetary policy: The SARB is responsible for formulating and implementing monetary policy to maintain price stability in the country. It does this by setting interest rates and controlling the money supply to achieve its inflation target. The SARB follows an inflation-targeting framework, which aims to maintain inflation within a specific target range (currently 3% to 6%) over the medium term.
- Financial stability: The SARB plays a crucial role in maintaining the stability of South Africa's financial system by monitoring and managing systemic risks. It oversees the functioning of the financial markets, the payments system, and the overall stability of the financial sector.
- Bank supervision: The SARB is responsible for the regulation and supervision of banks and other financial institutions in South Africa. It sets prudential standards, conducts regular inspections, and ensures compliance with regulations to safeguard the stability, integrity, and efficiency of the country's banking system.
- Currency issuance and management: The SARB has the exclusive authority to issue banknotes and coins in South Africa. It is responsible for the design, production, and distribution of the currency: South African Rand (ZAR) , as well as ensuring its integrity and stability.
- Foreign exchange reserves management: The SARB manages South Africa's foreign exchange reserves to ensure that the country has sufficient liquidity to meet its international obligations, support the value of the domestic currency, and maintain public confidence in the financial system.
- Acting as the government's banker: The SARB serves as the banker for the South African government, managing its accounts, providing treasury services, and facilitating the government's borrowing and debt management activities.
- Oversight of the national payment system: The SARB is responsible for the regulation and supervision of the national payment system to ensure its safety, efficiency, and integrity.
By fulfilling these functions, the South African Reserve Bank plays a crucial role in fostering sustainable economic growth, maintaining price stability, and promoting the overall well-being of the people of South Africa.