Image: Gallo

SA Reserve Bank Governor Gill Marcus

The move reaffirms the Bank’s efforts inflation targeting mandate of keeping consumer inflation within a 3% to 6% band.

Marcus along with Finance President Jacob Zuma and Minister Pravin Gordhan unveiled a new series of 10, 20, 50 and 200 rand notes all bearing the image of former president Nelson Mandela at a media briefing at the Bank in Pretoria on Saturday.

Saturday’s date marks the 22nd anniversary of the release of Mandela after he spent 27 years in jail and the new series was described as a “humble gesture” of gratitude for Mandela service to the country.

Countries such as Brazil, Germany, and Zimbabwe have had to undertake re-dominations of their currencies or scrap them and replace them with “new” currencies or other country’s currency to keep pace with galloping inflation that was measured in per cent per hour rather than weeks or months. 

That is why Marcus said the national currency in terms of importance was second only to the national flag. The esteem that the rand is held in as a means of exchange and a store of value is reflected in the fact that it is widely circulated in southern, central and east Africa.

It is this central principle that made the German Bundesbank such an ardent inflation fighter in the high inflation era of the 1970s and 1980s after the hyper-inflation period of the 1920s.

That is one of the reasons why the Bundesbank has been so reluctant to monetise the Greek government debt and why some of its officials have resigned from the European Central Bank.

The new bank notes will be issued during the course of this year, but the current bank notes will remain legal tender for many years to come. As the rand is circulated as far north as Kenya, it may take more than 11 years to replace the current “Big Five” series with the Nelson Mandela series.

The new bank notes feature the face of a living person for the first time since SA moved to the decimal system in 1960. The SA currency used to feature the face of the British monarch.

The design process to incorporate Mandela’s face and get buy-in from related players such as vending machine operators cost R2.5 million.

Over December 2011, the notes and coins in circulation reached R103 billion. As additional cash in required for contingency purposes, it is estimated that the SARB has printed R120 billion worth of notes in total.

The new note series is the first major redesign since 1992. The central bank undertakes periodic updates of the security features and the last one of the current design was in 2005.

Marcus expressed the hope that the current design would last forever as a tribute to Mandela, but security updates would still take place every six to eight years.