HISTORICAL DOCUMENT: STALS TESTIMONY IN 1996
CHRIS STALS: Why the Reserve Bank gave Bankorp the big loan
'The loans to Bankorp and to Absa were at all times recorded in the books of the Reserve Bank, were regularly audited and were included in the published financial statements'
Submission by Dr C.L. Stals, Governor of the South African Reserve Bank, to the Section 417 Commission of Enquiry Into the Affairs of Tollgate Holdings Limited 26 February 1996 PART ONE: GENERAL PHILOSOPHY BEHIND CENTRAL BANK ASSISTANCE TO BANKING INSTITUTIONS 1. The nature of central banking Central banks are very special institutions. They are empowered by sovereign, governments to create money where money does not exist. Central banks are therefore not dependent on outside sources such as governments, business organisations or private individuals for their funding. This very potent power places a great responsibility on central banks, namely to manage the monetary system of the country in the interest of the total community. Private banking institutions are licensed by central banks (or governments) to share in this responsibility of the central bank. They also create money, using central bank money as a basis for their money creation activities. This makes banking inst...
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