Abstract From the introduction of the repurchase-based refinancing system in March 1998, the size of the balance sheet of the South African Reserve Bank (SARB) has increased almost eight times. This balance sheet growth was accompanied by fundamental changes in the structure of assets and liabilities, resulting mainly from the closing out of the oversold forward foreign exchange book of the SARB until 2004, and the accumulation of foreign exchange reserves thereafter. This paper analyses the impact of the management of the balance sheet of the South African Reserve Bank (SARB) on money-market liquidity conditions in the banking sector. It also discusses a number of implications of trends in the SARB’s balance sheet policy, namely the shrinking money-market shortage in real and relative terms, the cost and effectiveness of monetary policy operations, the cost of reserves accumulation, balance sheet implications of alternative funding structures and financial stability considerations relating to the SARB’s balance sheet policy.