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What will nationalising the Reserve Bank achieve, asks Sarb's Rashad Cassim

7 June 2019 8:31 AM
Tags:
Nationalising SA reserve bank
south african reserve bank mandate
Rashad Cassim

Cassim is a member of the Monetary Policy Committee and he outlines the mandate of the Reserve Bank.

The South African Reserve Bank has been in the spotlight this week as ANC secretary general said the ANC has agreed to expand the mandate of the South African Reserve Bank (Sarb) to focus on development and job creation.

ANC leaders such as Tito Mboweni took issue with his statements and on Thursday President Cyril Ramaphosa released a statement reaffirming the mandate of the reserve bank, describing the current spat as "not helpful".

The Sarb on Thursday hosted a Monetary Policy Forum (MPF) in Cape Town, a bi-annual event meant to communicate and create a better understanding of monetary policy among stakeholders and members of the public.

South African Reserve Bank head of research Rashad Cassim details what the MPF does and the mandate of the Reserve Bank.

Read: ANC Sarb spat takes to Twitter: 'Is there policy uncertainty?' tweets Jacob Zuma

What we do twice a year is we write a document which has many elements to it. The most important is what is the Reserve Bank's take on the state of the economy, where is the global economy going, what are the growth issues and what is happening in the global financial markets and domestic markets?

Rashad Cassim, Head of research - South African Reserve Bank

We give a sense of what is happening in the global and domestic markets but more importantly explain reasons for the decisions we take.

Rashad Cassim, head of research - South African Reserve Bank

Cassim explained some of the processes considered when making decisions at the Reserve Bank.

He says it goes through a series of intense meetings looking at the state of the economy and everyone involved gives evidence-based presentations.

Two days before, we make any kind of decisions we have all sorts of presentations on different aspects of the economy, looking at drivers of inflation.

Rashad Cassim, Head of research - South African Reserve Bank

He commented on the current debates about nationalising the Reserve Bank.

The essence of the debate is what would you want to achieve by nationalising the Reserve Bank and in principle there is nothing wrong with nationalising the Reserve Bank.

Rashad Cassim, Head of research - South African Reserve Bank

What is the motivation for calling for nationalisation? Is it purely an obsession with ownership of the private sector or certain individual having shares in the bank or is it something more fundamental? That is something that I really don't understand.

Rashad Cassim, Head of research - South African Reserve Bank

There is a misconception, that some may think, that the reason why the bank is not carrying out its so-called developmental mandate is because of the private shareholders. There is a total disconnect between that.

Rashad Cassim, Head of research - South African Reserve Bank

The important issue is what are you willing to pay for it, how do you value it and what are you going to get out of it tomorrow if you nationalise, because nothing fundamental in the practice of price stability or financial stability will change.

Rashad Cassim, Head of research - South African Reserve Bank

To hear the rest of the conversation, listen below:


7 June 2019 8:31 AM
Tags:
Nationalising SA reserve bank
south african reserve bank mandate
Rashad Cassim

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