Page 178 - SARB: 100-Year Journey

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“The emerging consensus is that central banks should have an explicit financial stability mandate, coupled with what has now become known as macroprudential regulation. This is in addition to their monetary policy mandate,” Marcus continued.
During the 2008−09 crisis, South Africa had a stable fiscal profile. Therefore, fiscal policy could be used in a countercyclical manner, while monetary policy tools could be applied to stimulate demand in the real economy.
In 2008−09, demand stopped globally. “The natural response was to stimulate demand. We had instruments to stimulate demand: monetary policy was loosened; fiscal policy provided tax relief and (additional) spending,” Kganyago explained.
South Africa was also hugely assisted by the 2010 FIFA World CupTM because several large infrastructure projects were ramping up, creating jobs and adding to demand.
“From 2009 until November 2013, interest rates were reduced by 500 basis points. The budget moved from a surplus of 0.8% of GDP to a deficit of 6.8% of GDP,” said Kganyago.
He added: “We didn’t have to deploy our financial buffers. We simply stopped buying more reserves because we didn’t have to intervene in the foreign exchange market. ... Our banks remained well capitalised.”
South Africa became the first African nation to host the FIFA World Cup when it was granted host status for the 2010 tournament. /Shutterstock