Page 45 - Demo

During the 1919 Gold Conference in Pretoria, one of the recommendations was that, since South Africa had assumed Union status, the country needed a single banking legislation. Also revived was a long-standing proposal, dating back to the 1800s, for the establishment of a central bank.
In March 1920, a Select Committee of Parliament comprising 10 members was appointed by the Union government to investigate what it would take to establish a central bank in South Africa. This committee recommended that a privately owned central bank be established. The Union Parliament accepted the proposal. The private shareholders would include existing commercial banks in lieu of giving up their ability to print their own banknotes. The Currency and Banking Act was adopted in 1920, giving the SARB the sole right to print local banknotes for a period of 25 years.
The SARB was founded in the aftermath of World War I at a time when the South African currency, which was pegged to the British pound sterling, was still on the gold standard. In turn, the British pound sterling was pegged to the US dollar. However, this pegging arrangement came to an end in 1919. This meant the pound- dollar exchange rate could float according to demand and supply, creating problems for South Africa’s commercial banks. This was not only untenable, but also provided further impetus for the formation of a domestic central bank.
During that meeting in July – on 21 July 1921 to be precise – the SARB adopted a resolution to confirm Clegg’s appointment as Governor. Clegg had been recommended as the preferred candidate in December 1920 by a selection committee that included influential British economist John Maynard Keynes.
Rand Daily Mail Newspaper Johannesburg, Thursday, July 29, 1920.
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