Page 143 - SARB: 100-Year Journey

During his first year as Governor, Stals continued with this unconventional tradition despite initial discomfort. He duly prepared the money supply targets. Once done, Stals submitted the figures and proceeded to explain the targets to Cabinet.
He repeated the ritual at the end of 1990, but concedes he “felt uncomfortable about this”. When that 1990 Cabinet briefing ended, the SARB Governor approached De Klerk and told the President it was improper for the SARB “to get the approval of Cabinet for money supply targets every year. I explained the reasons.”
“Before I could finish my explanation, he [De Klerk] said, ‘Dr Stals, what you want to tell me is that you do not want to submit your money supply targets every year to Cabinet?’”
“I said, ‘Yes, Mr President. That’s exactly what I want to tell you.’”
“He [De Klerk] said, ‘You also want to tell me that the Cabinet doesn’t understand what it is about in any case?’”
“I said, ‘No, sorry Mr President. That is not what I wanted to say.’”
“He [De Klerk] agreed, and we never submitted the money supply targets to Cabinet ever again.”
As was the case during its founding in the 1920s, through to the Great Depression years and beyond, the SARB’s autonomy remained a salient topic of public discourse in the 1980s.
According to Stals, another area where the SARB’s institutional will was tested and encroached upon was in the determination of interest rates.
“Every time the Reserve Bank wanted to change the interest rates (repo rate), my predecessor took it to Cabinet. Had a discussion with Cabinet, and asked for approval,” Stals said.
“I didn’t think it was right to discuss interest rates with Government.” So, Stals changed this arrangement. De Klerk backed the SARB Governor.
The resolution of interest rates discussions with the Cabinet went along similar lines to the one about money supply.
Stals does admit: “I did it once. I went to the Cabinet to make a presentation.” But that was one too many times for the professional central banker.
“On the second occasion, I was heavily criticised by Cabinet ministers.”
Stals said De Klerk knew that the SARB Governor was not at ease with the setup of determining interest rates in consultation with the Cabinet.
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