Page 202 - SARB: 100-Year Journey

In 2021, the SARB completes its 100th year. It is the oldest central bank outside of Europe and the US. During the past century the central bank has been part of a profound, multi-layered transformation of South Africa covering several, often tumultuous, eras.
Its own evolution and history have been heavily influenced by the prevailing political and global developments over that period. At its formation, South Africa was officially known as the Union of South Africa, encompassing the two former Boer republics of the Orange Free State and Transvaal on the one hand, and the two British colonies of the Cape and Natal on the other. The Union had been formed in 1910, just 11 years before the SARB was established and began operating.
The roots of its formation are emblematic of the political developments of the time in that renowned internationalist, General Jan Smuts, who was instrumental in the formation of the League of Nations (subsequently the United Nations), reached out to John Maynard Keynes, a renowned economist and friend. The technical know-how that informed the legislation which enabled its formation – the Currency and Banking Act 31 of 1920 – was drawn mostly from the United Kingdom, the colonial power which had dominion over the Union of South Africa. The first Governor, William H Clegg, was, unsurprisingly, English. He had been born in Bloemfontein, South Africa, but was raised in England and joined the SARB from the Bank of England.
The English domination of the central bank’s staff complement, and a generally English disposition, led some Afrikaner nationalists to write to the SARB to remind it that English and Afrikaans were supposed to be afforded equal status in signage. That none of the indigenous languages were included in this arrangement is also indicative of the complete political disempowerment of black people at the time.
Dr Chris Stals, a former Governor, remembers that when he joined the SARB in 1955 there were few Afrikaans- speaking professionals, making it difficult to adapt to the place. By the time Stals became Governor in 1989, the institutionalisation of Afrikaans into the central bank was complete, with all public reporting done in both languages. The distinction between the ‘English’ and ‘Afrikaner’ eras of the SARB, which are probably more convenient to gloss over, is important to highlight in this publication because it also demonstrates the diversity and inclusiveness of the democratic era within the institution.
As influential as political developments were in the overall policy environment, the growth in the scope of the SARB’s mandate and operations also reflected global policy developments. Over time, policymaking increasingly became a technical exercise requiring rigorous data collection and meticulous analysis. This was not always easy as computing and communication technology were primitive in the early days by 2021 standards, or non-existent at all.
The manner in which the SARB and the country dealt with the fallout from the 1929 US market crash, and subsequent Great Depression, is a case in point. At the time, the Governor and Deputy Governor were not involved in the day-to-day operations. They were more akin to an Executive Chairman and Deputy Chairman while the ‘Chief Cashier’ ran the operations. However, they had the discretion to set the ‘bank rate’. There was an obvious disconnect. In the following years, legislative changes in the 1940s, 1960s and 1980s brought the officials closer to the SARB’s operations. Over the years, the number of deputy governors rose from one to three, with the expanded scope at the time of a Senior Deputy Governor.
But it was only during Governor Tito Mboweni’s tenure, when the MPC was formed, that the SARB subjected its determination of interest rates to public scrutiny.
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