The South African Reserve Bank has gone to the High Court to challenge a recommendation to change the mandate of its regulator.
The recommendation came from Public Protector, the country’s anti-graft watchdog, but the Reserve Bank governor believes the proposal to strip the bank of its mandate to keep the currency stable would have negative consequences, and would undermine its role in keeping South Africa’s financial system stable.
In the papers filed on Monday, Reserve Bank governor Lesetja Kganyago said that Public Protector Busisiwe Mkhwebane “threatens to undermine the critical contribution that the Reserve Bank makes to the stability of our financial system, which is central to sustainable growth and development, job creation, the reduction of inequality and poverty alleviation.”
“From the moment it was announced it had a serious and detrimental effect on the economy and for as long as it remains in place‚ it holds the risk of causing further rand depreciation‚ further ratings downgrades and further capital outflows‚” he added.
He further argued that the Reserve Bank was given an autonomous role to protect the currency‚ because the long term price stability may come into conflict with a government’s shorter-term goals.
By Jerry Owilli