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The South African Reserve Bank Amendment Bill

- Featured article by LAWYERS-ONLINE.CO.ZA - September 2018

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South Africa has seen a lot of conflict this year with regards to the many changes in our legal system.

Such is the case with the South African Reserve Bank Amendment Bill.

To put it in perspective, the Economic Freedom Fighters (EFF) has lodged a parliamentary motion to amend laws that govern the management and ownership of the country’s central bank.

What the Economic Freedom Fighters are trying to achieve is control of monetary policy by politicians. The EFF alone won’t be able to achieve this since the party only has 25 MPs in parliament. However, the ANC is backing the idea and embraced a resolution to nationalise the South African Reserve Bank.

Other countries in which governments achieved control of monetary policy include Zimbabwe and Venezuela.

The need to achieve this is influenced by the bank’s supposed failure to inspire economic growth and other inflation related factors. The concerns herein have brought the bank’s shareholder structure in question.

However, it is a misconstrued perception that the bank’s private shareholders affect monetary policy and that nationalisation would give government, as the majority shareholder, control of central bank policy.

Most reserve banks across the world have a share ownership structure in which the state is the majority or only shareholder. South Africa is one of just eight central banks with private shareholders, across the world. However, even while the South African Reserve Bank has private shareholders, they have no say over monetary policy. Just the same, state doesn’t dictate monetary policy in the majority of central banks that have government shareholders. So, ultimately, changing the structure of shareholders won’t change the way the bank is run.

Private shareholders have very little influence over the running of the bank. They have no influence in the daily management and appointment of executive management, the Governor and deputy governors.

However, the South African Reserve Bank Amendment Bill aims to change the ownership of the bank through nationalisation. The state would, therefore, own 100% of the bank. The bill also aims to move certain function entrusted to private shareholders to the minister of finance, which include the appointment of board members and the appointment of external auditors.

What’s more is that the bill makes no room for compensation to current shareholders and even states that the transfer of ownership will have no financial implications, further confirming that the clear objective is nationalisation without compensation.

The situation rests on the backbone of land expropriation without compensation.

Given the histories of countries that have gone this route and the recent happenings in our ruling party, a disheartening concern looms over the country.

For further information and the legalities involved around land, and now institution, expropriation without compensation, please consult our agency.

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072 847 6416 | info@lawyers-online.co.za

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The South African Reserve Bank Amendment Bill

 

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