South African Reserve Bank

Functions and Roles of the South African Reserve Bank

 

South African Reserve Bank (SARB) is the central bank of South Africa. established in 1921 after the parliament passed an act “Currency and Bank act” of 10^th August 1920, as a direct of the abnormal monetary and financial conditions which had been the results of World War 1. The SARB was the fourth central bank established outside of the United Kingdom and Europe, the others being United states, Japan, and Java.

The prior recommendations for the establishment of this central bank dates to 1879, A selected committee consisting of ten members of parliament was established on the 31^st of March 1920 to investigate the benefit to the national interest of the central bank. Following on the suggestions of the committee, the SARB opened for business on 30^th June 1921, making it now the oldest bank in Africa because it is now 100 years old.

The reserve bank has a mandate to protect the value of the currency in the interest of balanced and sustainable economic growth, and it has a complimentary mandate which means the financial sector regulation act assigns the SARB responsibility to maintain, promote and enhance financial stability.

The functions SARB is that it ensures the safety and soundness of the South Africa’s modern financial system and the national payment system. SARB provides important economic and financial statistic which provide an overview and presentation of South Africa’s economic situation. SARB also has static mandate for improving and protecting South Africa’s financial stability.

SARB’s roles include issuing and destroying banknotes and coins, regulating, and overseeing financial institutions, managing the country’s official gold and foreign reserves, managing the national payment system, and administering the remaining exchange rate. Finally, the control system acts as a banker to the government.

The SARB is also unique, and it does not have competitors because there is no other central bank in South Africa. It plays a very interesting and exciting roles, with in the country it supports the economy of the country in so many ways, for example every economy is supposed to have its own currency, in other words there must be a medium of exchange for goods and services for trade to take place and in order for people to generate income and livelihood the must be a denominator which is of value that people are prepaid to accept in exchange for their services in exchange for the goods that their supplying.

The SARB with two million shares issued is one of the world’s reserve banks, which have shareholders other than their respective national governments. The only restriction on shareholding is privatized; there can be approximately 700 shareholders in the SARB at present no single action holders may own more than 10 000 shares.

Shareholders qualify for a dividend of not more than 10 South African cents (the total maximum dividend is therefore 200000 South African Rand or maximum R1000 South African Rand for any individual shareholders) with the remining profit being paid to the South African government.