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History
At the time, commercial banks issued banknotes to the public, which had to be backed by gold. But the price of gold in the United Kingdom rose and became higher than the gold price in South Africa. Therefore, a profit could be made by converting banknotes into gold in South Africa and selling the gold in London. This meant that commercial banks had to buy gold at a higher price in London (for re-import into South Africa to back their banknotes in issue) than the price at which they converted their banknotes into gold. This “obligation to trade at a loss” posed a serious threat to the ability of banks to continue meeting their obligations.
To protect their financial viability, the commercial banks asked the government to release them from the obligation to convert their banknotes into gold on demand. This led to the Gold Conference of October 1919. Following the recommendations of the conference, a Select Committee of Parliament recommended the establishment of a central bank to assume responsibility for the issuing of banknotes and for taking over the gold held by commercial banks. The South African Parliament accepted the recommendation and published the Currency and Banking Act, Act No. 31 of 1920 in December 1920, which provided for the establishment of the SARB. At its establishment, the SARB had two primary objectives: to restore and maintain order in the issue and circulation of domestic currency and to restore the gold standard to pre-World War I rate of exchange. The SARB opened its doors for business for the first time on 30 June 1921 and issued its first banknotes to the public on 19 April 1922. The SARB is the oldest central bank in Africa.
In 1944, the Currency and Banking Act, Act No. 31 of 1920, was replaced by the South African Reserve Bank Act, 1944. The SARB’s initial 25-year period of issue for banknotes was extended indefinitely. South Africa abandoned the gold standard in 1932, choosing to link the value of the local currency to the pound sterling as the new monetary policy framework. South Africa introduced the rand on 14 February 1961, three months before the country left the Commonwealth to become a republic.
The SARB Act of 1944 was replaced with the South African Reserve Bank Act of 1989. The SARB accepted a formal mission statement for the first time in 1990. It stated that the aim of the organisation was to protect the internal and external value of the rand. This objective, albeit in a revised format (i.e., to protect the value of the currency), is also given as the primary goal of the SARB in the Constitution of the Republic of South Africa Act, 1996. Between 2000 and 2004, the SARB’s mission statement described its primary goal in the South African economic system as “the achievement and maintenance of financial stability”. From 2005 it was changed to “the achievement and maintenance of price stability”.
In 2000, South Africa became the 13th country to adopt an inflation-targeting monetary policy framework, targeting an inflation band of between 3 and 6 percent for consumer inflation.
1921 |
The founding of SARB |
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The South African Reserve Bank (SARB) is the oldest central bank in Africa. It was established in 1921 as a result of unusual financial and monetary conditions stemming from World War I (1914–1918). At the time, the banknotes that commercial banks issued to the public had to be backed by gold. But when the price of gold in the United Kingdom rose, a profit could be made by converting banknotes into gold in South Africa and selling the gold in London. This meant that commercial banks in South Africa had to buy gold for re-import at a higher price in London than the price at which they converted their banknotes into gold, obliging them to trade at a loss. To ensure their financial viability, the banks requested the government to release them from the obligation to convert their banknotes into gold on demand. Following the Gold Conference of October 1919, a Select Committee of Parliament recommended that a central bank be established to hold commercial banks’ gold and issue banknotes. Parliament accepted this recommendation and published the Currency and Banking Act in December 1920, which provided for the establishment of the SARB. The SARB had two primary objectives – to restore and maintain order in the issue and circulation of domestic currency and to restore the gold standard to the pre-World War 1 rate of exchange. It opened its doors for business on 30 June 1921 and issued its first banknotes to the public on 19 April 1922.
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1932 |
Gold standard dropped
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South Africa abandoned the gold standard in 1932, choosing to link the value of the local currency to the pound sterling as the new monetary policy framework. In 1944, the South African Reserve Bank Act replaced the Currency and Banking Act of 1920. The SARB’s initial 25-year period of issuing banknotes was extended indefinitely.
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1961 |
Introduction of the rand |
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South Africa introduced the rand on 14 February 1961, three months before it left the Commonwealth to become a republic.
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1985 |
The dual rand system |
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In 1985, South Africa introduced exchange controls in response to significant capital outflows resulting from debt default and economic sanctions. The sanctions were an anti-Apartheid measure applied by many of the country’s major trading partners and their business entities. The exchange controls were implemented through the dual rand system, which set one exchange rate for current account payments for residents and another rate for capital account payments for non-residents. This meant that foreign investments in South Africa could only be sold for financial rand, limiting the outflow of capital from country. The dual rand system was abolished in 1995.
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1996 |
The SARB mandate |
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The South African Reserve Bank Act 90 of 1989 replaced the SARB Act of 1944. The mission statement adopted in 1990 stated that the SARB’s aim was to protect the internal and external value of the rand. This objective, albeit in revised form (to protect the value of the currency), is the primary goal of the SARB outlined in the Constitution of the Republic of South Africa, 1996. Between 2000 and 2004 the SARB’s mission statement described its primary goal as “the achievement and maintenance of financial stability”. In 2005, this was revised to “the achievement and maintenance of price stability”.
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2000 |
Inflation targeting |
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In 2000, South Africa became the 13th country to adopt an inflation-targeting monetary policy framework. The SARB now targets an inflation band of between 3% and 6% for consumer inflation.
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2008 |
Global financial crisis |
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The SARB played a key role in guiding South Africa through the 2008 global financial crisis. It cut the repurchase rate by 650 basis points between November 2008 and November 2010. This crisis led to an increased focus within the Bank on financial stability objectives.
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2020 |
COVID-19 |
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In 2020, the COVID-19 pandemic led to global financial stress. The SARB was again a key player in South Africa’s response to the crisis, cutting the repurchase rate by 225 basis points in the first four months of the year. It also introduced liquidity measures to ensure the continued smooth functioning of the financial system. | |
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Ms G Marcus
9 November 2009 — 8 November 2014
Ms Gill Marcus was appointed as Governor of the SARB on 9 November 2009. She was the ninth Governor, and first woman, to be appointed to lead the Bank.
Ms Marcus was born in Johannesburg, South Africa, in 1949. Both her parents were anti-apartheid activists, and in 1969, the Marcus family went into exile in the United Kingdom. During this time, she completed a Bachelor of Commerce degree at the University of South Africa and joined the African National Congress (ANC). In 1970, Ms Marcus started working for the ANC’s Department of Information and Publicity (DIP) and later became the DIP’s deputy secretary. In 1990, after the unbanning of the ANC, Ms Marcus returned to South Africa and established the ANC’s Information Department. She was elected to the ANC’s National Executive Committee and the National Working Committee and held these positions until 1999. In 1994 she was elected to Parliament and served as the first Chairperson of the Joint Standing Committee on Finance.
Prior to her appointment at the SARB, Ms Marcus was Professor of Policy, Leadership and Gender Studies at the Gordon Institute of Business Science. She also served as the non-executive chairperson of the Absa Group, and a non-executive director of Bidvest and Gold Fields Operations Ltd. She has also chaired a number of regulatory and supervisory bodies, including the Financial Services Board and the Standing Committee for the Revision of the Banks Act. Ms Marcus served as Deputy Minister of Finance for three years from 1996 and was appointed for a five-year term as Deputy Governor of the SARB in 1999. She holds a Bachelor of Commerce degree from the University of South Africa and was awarded an Honorary Doctorate from the University of Stellenbosch.
Mr T T Mboweni
8 August 1999 — 8 November 2009
The youngest of three children, Mr Tito Mboweni was born on 16 March 1959. He grew up in Tzaneen in the Northern Province. He attended the University of the North between 1979 and 1980, where he registered for a Bachelor of Commerce degree, but left South Africa to go into exile in the same year. While in exile in Lesotho, he joined the African National Congress (ANC) and was an activist for the party in many capacities.
He obtained a Bachelor of Arts (honours equivalent) degree in Economics and Political Science from the National University of Lesotho in 1985. In 1987, he obtained a Master of Arts degree in Development Economics from the University of East Anglia in England. Mr Mboweni was Minister of Labour from May 1994 to July 1998 in President Nelson Mandela’s cabinet. Prior to his appointment as Minister of Labour, Mr Mboweni was deputy head of the Department of Economic Policy in the ANC. He also represented the ANC on several domestic and international platforms.
Mr Mboweni was a member of the ANC’s National Executive and National Working Committees and was also Chairperson of the National Executive Committee’s Economic Transformation Committee, which coordinated the development of ANC economic policies. Mr Mboweni became one of the World Economic Forum’s Global Leaders of Tomorrow in 1995. In 1997, Mr Mboweni was appointed head of the ANC’s Policy Department, which was responsible for managing ANC policy processes. On joining the Reserve Bank, he resigned all of his elected and appointed positions in the ANC.
He joined the SARB in July 1998 as Adviser to the Governor. In August 1999 he was appointed Governor of the Bank. During his tenure, he was appointed Honorary Professor of Economics at the University of South Africa from 2000 to 2003. In 2001, the University of Natal awarded Mr Mboweni an Honorary Doctor of Economics degree. Mr Mboweni was also elected Chancellor of the University of the North-West effective 23 February 2002. The University of Stellenbosch appointed him Professor Extraordinary in Economics from 1 April 2002 to 31 March 2005.
Dr C L Stals
8 August 1989 — 7 August 1999
Dr Stals joined the SARB on 1 May 1955 as a clerk in the Exchange Control Department. In 1956 he was transferred to the Statistics section of the then Department of Economic Research and Statistics. During his early years with the SARB, he was also a part-time lecturer in the Commerce, Money and Banking Department of the University of Pretoria. In 1960 he was promoted to First Assistant in the Department of Economic Research and Statistics and eventually became head of the department’s Balance of Payments section. When Dr De Jongh was made Governor of the SARB, Dr Stals was appointed Assistant to the Governor with effect from 1 July 1967. On 1 February 1975, Dr Stals became the SARB’s General Manager, and from 1 April 1976, he was appointed Deputy Governor.
On 1 January 1981, Dr G P C de Kock assumed the Governorship, while Dr Stals assumed the position of Senior Deputy Governor. On 1 September 1985 a new phase in his career began when he became Director-General of the Department of Finance. With effect from 1 May 1989, he was appointed Special Economic Adviser to the Minister of Finance but filled this position for only a few months because the President named him as Dr De Kock’s successor as Governor of the SARB from 1 November 1989. However, Dr Stals assumed the Governorship on 8 August 1989 after the death of Dr De Kock. He held this position until 8 August 1999, when Mr T T Mboweni was appointed as Governor.
Dr Stals’ long service in various executive positions in the SARB led to his involvement in almost all the major events in the South African economy over a quarter of a century. In 1968 he was a member of the South African team of negotiators that clinched the crucial gold agreement with the International Monetary Fund. He was also involved in the old swap arrangements, the debt standstill agreements and the negotiations leading to the establishment of the Rand Monetary Area.
In October 1993 Dr Stals was honoured by the Afrikaanse Handelsinstituut with the M S Louw Prize for his dedicated efforts to curb inflation and maintain financial discipline.
Dr G P C de Kock
1 January 1981 — 7 August 1989
Dr de Kock’s father (Dr Michiel de Kock) was Governor of the SARB from 1945 to 1962. As early as 1951, Dr Gerhardus de Kock was engaged by the SARB to conduct specialised research on a part-time basis. At the end of 1955 he joined the SARB as an economist. On 1 July 1962, Dr de Kock was appointed as Economic Adviser, and on 1 January 1964, he was appointed Head: Economics Department. In May 1966, he was seconded to the Treasury as a Special Economic Adviser. In 1968, he was appointed Alternate Executive Director of the International Monetary Fund in Washington, DC, as the representative of South Africa, Australia, New Zealand, Lesotho and Swaziland – a position which he held with distinction up to the middle of 1971.
On his return to South Africa, Dr de Kock was appointed as a Deputy Governor of the SARB with effect from 1 July 1971 and then promoted to Senior Deputy Governor on 1 July 1976. In 1977, Dr de Kock was seconded to the Ministry of Finance as a Special Economic Adviser. During this period, he was also appointed as the Chairperson of the Commission of Inquiry into the Monetary System and Monetary Policy in South Africa. This commission eventually became known as the De Kock Commission. He succeeded Dr T W de Jongh as SARB Governor in January 1981, a position he held until his death in August 1989.
Among his many distinctions, Dr de Kock was elected Honorary Fellow of the Institute of Bankers in South Africa in 1984 and “Central Banker of the Year" in 1988 by Euromoney magazine. After his death the University of Pretoria instituted the Gerhard de Kock Memorial Lecture, which was delivered annually by a prominent personality in the field of central banking. To this day, there is a bronze bust of Dr de Kock, by the sculptor Jo Roos, at the entrance of the Gerhard de Kock Auditorium in the SARB’s Head Office building.
Dr T W de Jongh
1 July 1967 — 31 December 1980
On 1 January 1946, Dr de Jongh joined the SARB and became the founder of monetary statistics in South Africa. He initially held the position of Statistician but this was later renamed Head: Department of Economic Research and Statistics. He was also involved in the establishment and extension of the SARB’s Quarterly Bulletin. From 1 July 1962, Dr de Jongh was promoted to Executive Assistant until his appointment as Governor of the SARB from 1 July 1967. He served as Governor for 13.5 years until his retirement at the end of 1980.
During his term as Governor he acted as Chair of the National Finance Corporation and as a member of the Prime Minister’s Economic Advisory Council. He also acted as Alternate Governor (1967—72) and Governor (1972—80) for South Africa at the International Bank for Reconstruction and Development, the International Finance Corporation and the International Development Agency. He was South Africa’s representative at the Bank for International Settlements (BIS) from 1967 to 1980. It was thanks to his initiative that the SARB became a member of the BIS in June 1971. At that stage, the Reserve Bank was one of only five banks from outside Europe that were members of the BIS.
As Governor, Dr de Jongh faced various international monetary crises. He concluded the gold agreement with the International Monetary Fund in Rome in December 1969. This agreement gave the SARB more scope for marketing the country’s gold and dealt the final blow to the movement for the demonetisation of gold. The confidence crisis in the South African banking sector early in 1977 also presented a major challenge. The SARB’s handling of the problem soon restored domestic and international confidence in the South African banking system. Dr de Jongh attended the annual meetings of the International Monetary Fund and the BIS. He was also involved in the deliberations of the G20 on international monetary reform during the period 1972—74. He served as President of the Institute of Bankers in South Africa in 1970 and again in 1975. In 1980 he served as Vice-President of the International Bankers Association.
In 1978 Dr de Jongh was awarded an Honorary Doctor of Commerce degree by his alma mater. In the early 1970s he was elected a Fellow of the International Bankers Association and was likewise honoured by the South African Institute of Bankers.
Dr G Rissik
1 July 1962 — 30 June 1967
Following a chance meeting on the street with Deputy Governor H C Jorissen, Dr Rissik decided to apply for a position at the SARB and was appointed as a junior clerk on 3 March 1923. He enrolled at the extramural division of the Transvaal University College for a Bachelor of Commerce degree in order to qualify himself in his chosen career. The Bank’s annuals show that in 1924 he was also preparing for examinations of the Institute of Bankers in South Africa. In 1925 he obtained his Final Bankers Diploma and his Bachelor of Commerce degree in 1926. Later he passed the Final Diploma of the Chartered Institute of Secretaries and an advanced course in Auditing at the University of South Africa.
On 1 July 1933, Dr Rissik was promoted to Audit Clerk, and at the beginning of 1939, he was promoted to Assistant Secretary. Four and a half years later he was made Chief Accountant and Secretary, and on 1 October 1954, he succeeded L J Cockhead as Chief Cashier. As of 1 January 1958, he was appointed Executive Assistant to the Governor. After the introduction of the second Deputy Governor post in 1960, Dr Rissik was promoted to this new position from 1 May 1960. On 1 July 1962, he succeeded Dr M H de Kock as Governor of the SARB. He retired from the Bank at the end of his term on 30 June 1967.
During his career at the Bank, Dr Rissik served as the first Secretary of the National Finance Corporation until 1954. He was a member of the Technical Committee on Banking and Building Society Legislation, which from 1961 to 1964 undertook an in-depth study of the position of banking and the building society movement in South Africa. In 1958 he was appointed Chairperson of the newly created South African Bank Note Company and remained in this position until shortly after his retirement. From 1958 onwards, he was a member of a committee of the Department of Agriculture (representing the SARB and Treasury), which investigated certain aspects of agricultural credit. He also represented the SARB for some years on the Export Credit Guarantee Insurance Scheme and, during his term as Governor, served as Chairperson of the National Finance Corporation.
In 1964 the University of Pretoria conferred an Honorary Doctor of Commerce degree upon him.
Dr M H de Kock
1 July 1945 — 30 June 1962
Through his work on the Board of Commerce and Industry, Dr de Kock came into contact with the State Treasury and later with the Minister of Finance, Advocate N C Havenga. In 1927, he attended the International Economic Conference in Geneva, Switzerland, as a delegate of the Union of South Africa. At the request of the Minister of Finance, he visited a number of central banks after the conference with a view to advising the minister on the possible extension of the powers and functions of the relatively new South African Reserve Bank. His report on this visit – a report on the methods employed by central banks for the effective control of currency and credit in Europe and America, and the extent of their applicability to the operations of the SARB – not only laid the foundation for his later appointment to the Bank, but formed the base for his later authoritative work on central banking.
Dr de Kock was appointed at the SARB with effect from 1 January 1931. His position as Deputy Governor, together with his wide knowledge of central banking, enabled him to publish his magnum opus, Central Banking, in 1939. This was internationally recognised and translated into Spanish, Portuguese, Japanese, Hindi and Gujarati. On 1 July 1945, Dr de Kock succeeded Dr Johannes Postmus as Governor of the Reserve Bank. He held this position until his retirement on 30 June 1962.
In February 1946, Dr de Kock was appointed South Africa’s Alternative Governor at the International Monetary Fund and South Africa’s Governor on the board of the World Bank. Recognition of his services to his country and the world of finance in general came in the form of various awards and honorary doctorates. In 1950 the Suid-Afrikaanse Akademie vir Wetenskap en Kuns honoured him with the Havenga Prize for his achievement in economics and in 1965 the same institution awarded him the Frans du Toit Prize for business achievements.
Dr de Kock also authored two more books: Economic Development of South Africa (1936) and Geld- en Finansiewese (1944). In addition, he published numerous articles in the South African Journal of Economics and the South African Banker’s Journal. To encourage formal studies by SARB officials, Dr de Kock donated a prize to be awarded on an annual basis by the Institute of Bankers to the candidate obtaining the highest marks in the International Banking and Credit, Money Systems and Exchange examination.
After retiring, Dr de Kock stayed on as Chair of the Bank’s Board of Directors for another year and a half, subsequently serving as an ordinary Director until 30 June 1970. His son, Dr G P C de Kock, became Governor of the Reserve Bank on 1 January 1981.
Dr J Postmus
1 January 1932 — 30 June 1945
Dr Postmus started his career in 1896 with the Dutch banking institution LedeBoer & Co. in Almelo, in the province of Overijssel. He later joined the Nederlandsche Bank voor Zuid-Afrika headquarters in Pretoria in 1903. In 1905 he was appointed Secretary of the Board. Five years later he was transferred to the SARB’s Inspection Division, where he eventually became Chief Inspector. During his career with the Nederlandsche Bank he had a hand in the creation of Ons Eerste Volksbank. He initially served as Director of this institution, but after he was appointed General Manager of the Nederlandsche Bank, he was elected Honorary Director.
Dr Postmus held this position until his appointment as the SARB’s Deputy Governor with effect from 1 January 1927. On 1 January 1932 he succeeded Dr William Clegg as Governor of the SARB until his retirement on 30 June 1945. In 1926, he served a term as President of the Institute of Bankers in South Africa. He was one of the SARB’s first directors, and served as one of three representatives of the commercial banks on the SARB’s Board. His first term as Board member started on 9 May 1921 but ended on 30 June 1923 when the representation of commercial banks on the Board was terminated by legislation.
Part of Dr Postmus’s term of office with the Bank coincided with a turbulent period in South Africa's economic history and he experienced the unfolding drama first-hand, including the vexing question surrounding the return to the gold standard and its eventual abandonment. In 1932 he testified before the Select Committee on the Gold Standard and in 1933 he accompanied the Minister of Finance, Advocate N C Havenga, to the World Economic Conference in London as an adviser.
Dr Postmus was the Chairperson of the Financial Committee of the University of Pretoria and in April 1946 was conferred an Honorary Doctor of Commerce degree by the University of Pretoria.
Mr W H Clegg
17 December 1920 — 31 December 1931
Mr Clegg started his career in January 1885 as a clerk at the Craven Bank (which was later taken over by the Bank of Liverpool) in Nelson, England. In 1886 he joined the service of the Bank of England. In 1895 he was promoted to Assistant of the Auditor and thereafter the positions of First Auditor, Deputy Principal of the Branch Banks Office, Principal of the Branch Banks Office and, finally, Chief Accountant.
His appointment with effect from 17 December 1920 as first Governor of the SARB was in accordance with the policy of the Bank of England. He initially encountered a general lack of knowledge on the nature and functions of a central bank in South Africa. In addition, there were shortcomings in the South African Reserve Bank Act, which hampered the work of the SARB. His first few years were largely devoted to addressing these challenges. Mr Clegg served two full terms of five years each, plus an additional year (at his own request) in order to oversee the building of the SARB’s new Head Office.
Unfortunately for him, this additional year coincided with one of the most difficult periods in the SARB’s history when Britain’s decision in September 1931 to abandon the gold standard led to the total loss of the SARB’s reserves, which had been built up carefully over its first 10 years of operations.
Mr Clegg had no formal training in economics or banking but was sufficiently well respected to be elected President of the Institute of Bankers in South Africa in 1922, a position he held for two years. When the Economic Society of the South Africa was established in 1925, he was elected President of the society.
On 31 December 1931 he retired as Governor of the SARB and later returned to England. At the beginning of 1932, Mr Clegg was appointed an Executive Director on the Court of Directors of the Bank of England, a position which he occupied until 1937. In 1932 he was also appointed a Lieutenant of the City of London and in 1935 he was awarded the King’s Silver Jubilee Medal.
