The SARB is the central bank of the Republic of South Africa. It was established in 1921 by an Act of Parliament, in response to the abnormal economic conditions resulting from the First World War. It is the oldest central bank in Africa and first issued SA banknotes to the public on 19 April 1922 (prior to that commercial banks issued banknotes).
The SARB’s functions include:
• to formulate and implement the country’s monetary policy;
• to issue banknotes and coins;
• to supervise SA’s banking system;
• to manage SA’s gold and foreign exchange reserves;
• to act as banker to the government;
• to administer SA’s exchange controls; and
• to act as lender of last resort (i.e. to lend to commercial banks) in exceptional circumstances. The independence and autonomy of the Bank are entrenched in the SA Constitution. While the government sets the

overall monetary policy goals for the SARB, the latter can use any instruments of monetary policy at its disposal to achieve the goals. The mandate currently set for the SARB is to achieve and maintain price stability in the interest of balanced and sustainable economic growth in South Africa. The achievement of price stability is quantified by the setting of an inflation target by Government that serves as a yardstick against which price stability is measured. The SARB is run by a board of directors consisting of a Governor (presently Lesetja Kganyago), three Deputy Governors, and eleven Directors. The Governor and Deputy governors are appointed for five-year terms by the President of South Africa in consultation with the Minister of Finance. Four of the directors are also appointed by the President for terms of three years. The remaining seven directors are appointed by the shareholders of the SARB, also for three-year terms. Some of the SARB’s activities have been organised in wholly owned subsidiary companies

• Corporation for Public Deposits – accepts call deposits from the public sec-

tor and invests the funds in short-term money-market instruments and special Treasury bills
• South African Banknote Company – prints all the banknotes currently in use in SA and also prints banknotes for neighbouring countries
• South African Mint – is responsible for the manufacturing of all circulation coins issued in South Africa and also produces coins for other countries. This company also produces Krugerrand coins.

Unlike the Bank of England, which provided the model for establishing the SARB, the SARB is structured as a company with private shareholders and is one of eight reserve banks worldwide that have shareholders other than the governments of their respective countries (the others being Belgium, Greece, Italy, Japan, Switzerland, Turkey and the USA). According to the SARB website, the Bank currently has more than 750 shareholders and its shares are traded on an Over- the- Counter Share Transfer market coordinated within the SARB (the SARB was delisted from the JSE Securities Exchange in 2002). After allowing

for certain provisions, payment of company tax on profits, transfers to reserves and dividend payments to shareholders, the surplus of the Bank’s earnings is paid to the Government. The SARB has 2 million shares in issue and no single shareholder may hold more 10 000 shares. Shareholders are entitled a dividend of not more than 10 cents per share per annum (the total maximum dividend is therefore R200,000 or a maximum of R1,000 for any individual shareholder). The SARB’s operations are therefore not driven by a profit motive but are intended to serve the country’s best interests.
The future of the above share structure will be subject to intense speculation in the coming months. However, for the time being, the President has assured that the constitution sets the role of the Reserve Bank as protecting “the value of the currency in the interest of balanced and sustainable economic growth in regular consultation with government. This policy has not changed”.