SA’s banks have experienced a sharp increase in exposure to government debt. In 2008, government bonds made up 3.3% of banks’ total assets, but in December last year, the most recent data available, that had ballooned 9.3%. In nominal terms, that is a tenfold increase to R607bn, from R64bn 13 years ago.

The steepest acceleration has occurred during the Covid-19 crisis. From March to end-2020, there was a 32% increase in banks’ holdings of government debt. Much more of SA’s deposits are being used to fund the government...

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