27 December 2017

South Africa: Reserve Bank Functions in the Public's Interest

The South African Reserve Bank (SARB) says it continues to function in the public interest.

In a statement, the central bank said it is of the view that the process of changing the ownership structure of the SARB at this point in time could raise the level of risk and uncertainty for the country in both a financial and economic policy sense.

"This heightened exposure to risk is unwarranted given the country's fragile economic situation. The SARB functions in the public interest. Private shareholders have no influence whatsoever on monetary policy, financial stability, or banking regulation," said the central bank.

The reserve bank said policy making and execution remain the preserve of the Governor and Deputy Governor, who are appointed by the President.

It said the rights of the private shareholders are highly circumscribed.

A shareholder, and his or her associates, cannot hold more than 10 000 shares out of the total of two million shares in issue.

According to the SARB Act, shareholders receive a fixed annual dividend of 10c per share, making the total dividend pay-out each year R200 000.

The bank said nationalisation would be an expensive exercise.

"Nationalising the SARB would also be expensive as its shares currently trade for much less than the price at which some existing shareholders are willing to sell their shares. The 'buying-out' of existing shareholders will therefore result in paying large sums of money to effect cosmetic changes that will have no bearing on the manner in which the SARB carries out its mandate or executes its policy responsibilities," it said.

South Africa

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