It creates a structural money market shortage so that banks have to come to the SARB to finance their minimum cash requirement. This enables the SARB to control the price of short-term money.
The main refinancing operation is the weekly seven-day repurchase auction, which is conducted with the commercial banks, at the repo rate as determined by the MPC. The SARB lends funds to the banks against eligible collateral, such as government bills and bonds.
The SARB also conducts various open market operations to manage liquidity in the market and thus maintain the structural shortage. These include issuing debentures, implementing reverse repos, moving public sector funds between the market and the SARB, and conducting money market swaps in the foreign exchange market.