Page 160 - SARB: 100-Year Journey

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Brian Kahn. /SARB Dr Ernie van der Merwe. /SARB Dr XP Guma. /SARB
Kahn, who joined the Bank in 1999, shared a similar point of view. “It was an important period as monetary policy frameworks internationally had been changing, and there had been a shift from the Governor making decisions about monetary policy to decisions being made by a committee.”
“In the previous regime, Governor Chris Stals would make monetary policy decisions on his own. I presume he would consult with some of his senior members of staff, but basically it was his decision and there was never any formal committee or scheduled announcement. He would just announce that interest rates had been changed. And that was how it was for a lot of countries. But during the 1990s, there was a move towards decision-making by a committee,” said Kahn in contextualising the development.
“You know, it’s funny,” recalled Kahn. “The Bank was, and to some extent still has to be, secretive in certain respects. But one of the striking things, for me, is how that changed over time. Again, it wasn’t simply the SARB doing that. This was an international development.”
“Part of the traditional mystique of central banking was the secrecy code. What inflation targeting did was to move things in the other direction as communication and transparency became really important,” Kahn added.
Dr Ernie van der Merwe, a veteran at the institution who witnessed the leadership of Dr Theunis Willem ‘Bob’ de Jongh (1967−1980), Dr Gerhard de Kock (1981−1989) and Stals (1989−1999) went even further in detailing the changes initiated by Mboweni.
Sometime between 1998 and 1999, Mboweni organised a strategic planning session “just before or a little after he took over as Governor,” said Van der Merwe. In the session, there was a long discussion about the SARB’s future.
That included whether informal inflation targeting, for instance, would continue as official policy or if the central bank would change to formal inflation targeting. The Minister of Finance would make the final decision on the matter, but the SARB was expected to make recommendations.
Van der Merwe said: “At the same session, we discussed the formation of the MPC and how to make monetary policy more transparent. We decided to form monetary policy forums. In these forums, the public would be informed as to why decisions were taken. It was also decided to introduce the Monetary Policy Review to explain further the monetary policy stance.”
Mboweni remembers that initial period well. “We changed the decision-making systems. It was very important. The Governors’ Executive Committee – the Governor and deputy governors, the economic advisers and the legal advisers – would meet on a fortnightly basis during my time. That’s part of the culture of change,” the former Governor said.
The inspiration for the MPC came from a source that was a product of the new pulse in central banking. “We modelled it, in a way, along the lines of the European Central Bank’s monetary policy committee, [and] the Bank of England’s monetary policy committee,” Mboweni said.