Page 158 - SARB: 100-Year Journey

148
President Thabo Mbeki (left) with Dr Stals and Mr Mboweni. /SARB
Much like Dr Chris Stals, who navigated through peculiar institutional arrangements with the government of his day and dealt with legacy issues, Governor Tito Mboweni was not spared from the peaks and troughs of being South Africa’s foremost central banker.
The transition years, and the period immediately prior, were tough. The dawn of the millennium did not have a shortage of challenges.
Stals contended with the debt standstill, the SARB’s independence and high inflation. When Mboweni assumed the governorship of the Bank, South Africa had a net open forward currency position (NOFP) upwards of US$25 billion (akin to an overdraft in foreign currency), negative reserves, and extreme movements in the rand, which prompted the establishment of a commission of inquiry. Mboweni considers the latter the
lowest point in his two terms as Governor. A combination of factors contributed to the high NOFP position, the most prominent of which was the 1998 Asian crisis that resulted in the SARB intervening in the foreign exchange market to defend the rand. The Bank forged closer ties with the National Treasury in a partnership of equals with clearly defined and demarcated mandates. Furthermore, the SARB drew nearer to Parliament and the public.
Unlike Stals, Mboweni was young and untested. This had its upsides and downsides. On policy, Mboweni pushed the boundaries. Mboweni oversaw the introduction of the Monetary Policy Committee (MPC) which repositioned the Bank from an aloof and somewhat secretive institution, to one that was transparent and accountable about its policy decisions. The MPC also served as a platform through which the central bank demystified the determination of interest rates and subjected