Reserve Bank's inflated issue
Battle for the soul of the Reserve Bank
The Bank has kept its ownership structure unchanged since its formation in 1921, when most central banks around the world had private shareholders. Some governments were compelled to take over when monetary shortages occurred during the Great Depression of the 1930s and after World War 2
Calls for nationalisation of the Reserve Bank have become louder since the release of public protector Busisiwe Mkhwebane’s report on the apartheid-era Absa/Bankorp rescue, which recommends that Absa pay back over R1bn in assistance received from the Bank. Mkhwebane also recommended that the Bank’s constitutional mandate be changed to focus on the “socioeconomic wellbeing” of all citizens. In a paragraph that appears to contradict itself, Mkhwebane reopens the nationalisation debate, saying: “Leading authors advocating and pointing to the ideology of state banks and nationalisation of monetary currency believe that the notion of the lender of last resort’s status that is inherent to central banks internationally would cease to exist if governments take sole power in creating money through the establishment of state banks.” It adds to years-long calls from trade unions and, lately, from finance minister Malusi Gigaba’s adviser, Chris Malikane, to nationalise the Bank, which has share...