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2005-10-17: Press Statement: Financial Stability Review: September 2005
Published Date:
2005-10-17
Last Modified Date:
2020-10-08, 08:12 PM
Category:
Media > Media Releases
The South African Reserve Bank (SARB) today released the September 2005 edition of the Financial Stability Review. This publication covers the six months to June 2005 and is part of the SARB’s approach to encourage debate on financial stability issues and enhance the understanding of the financial system and its strengths and threats. According to the Financial Stability Review the global financial system remained resilient during the first half of 2005, despite global economic growth slowing in the second quarter in part reflecting the impact of higher oil prices. Global growth also remained unbalanced and unduly dependent on the United States and China. Other uncertainties include excessive exchange rate volatility and the possibility of faster-than-expected interest rate rises and their potential impact on real-estate markets. Macroeconomic and financial conditions remained positive in emerging-market countries, while improved macroeconomic policies, progress with structural reforms, and debt relief initiatives characterised financial conditions in sub-Saharan Africa. Based on the analysis of various indicators, the South African financial system was assessed as sound during the period under review. The banking sector remained healthy as the asset quality and profitability of banks improved, and they remained well capitalised. An assessment of the risks facing the household and non-financial corporate sectors, as well as the capacity of the banking sector to absorb shocks, confirm the stability of the South African financial system over the medium-term horizon. The risk of stagnation or even a decline in residential property prices cannot be ruled out. Although an increase in the default rate among mortgage-holders can be detrimental to the banking sector, it was assessed as being resilient enough to absorb such shocks. According to the Financial Stability Review South Africa’s continued good economic performance and the stability of its financial system is also dependent on the relative prosperity of the Southern African region. Despite many challenges, good progress has been made by the Southern African Development Community towards the harmonisation of financial systems and markets in order to develop more robust and efficient financial systems in the region. For further information please contact Samantha Henkeman on:Tel: (012) 313-4669 orSam.henkeman@resbank.co.za