You are here -allRefer - Reference - Country Study & Country Guide - South Africa >

allRefer Reference and Encyclopedia Resource

allRefer    
allRefer
   


-- Country Study & Guide --     

 

South Africa

 
Country Guide
Afghanistan
Albania
Algeria
Angola
Armenia
Austria
Azerbaijan
Bahrain
Bangladesh
Belarus
Belize
Bhutan
Bolivia
Brazil
Bulgaria
Cambodia
Chad
Chile
China
Colombia
Caribbean Islands
Comoros
Cyprus
Czechoslovakia
Dominican Republic
Ecuador
Egypt
El Salvador
Estonia
Ethiopia
Finland
Georgia
Germany
Germany (East)
Ghana
Guyana
Haiti
Honduras
Hungary
India
Indonesia
Iran
Iraq
Israel
Cote d'Ivoire
Japan
Jordan
Kazakhstan
Kuwait
Kyrgyzstan
Latvia
Laos
Lebanon
Libya
Lithuania
Macau
Madagascar
Maldives
Mauritania
Mauritius
Mexico
Moldova
Mongolia
Nepal
Nicaragua
Nigeria
North Korea
Oman
Pakistan
Panama
Paraguay
Peru
Philippines
Poland
Portugal
Qatar
Romania
Russia
Saudi Arabia
Seychelles
Singapore
Somalia
South Africa
South Korea
Soviet Union [USSR]
Spain
Sri Lanka
Sudan
Syria
Tajikistan
Thailand
Turkmenistan
Turkey
Uganda
United Arab Emirates
Uruguay
Uzbekistan
Venezuela
Vietnam
Yugoslavia
Zaire

South Africa

Banking and Currency

Banking

The heart of the banking system is the South African Reserve Bank, which is the primary monetary authority and custodian of the country's gold and foreign exchange reserves. The Reserve Bank is managed by a board of fourteen directors, seven represent ing major commercial and financial institutions, industry, and agriculture, and seven appointed by the government. Of the latter, one serves as governor, and three serve as deputy governors of the Reserve Bank.

The Reserve Bank's primary functions are to protect the value of the rand and to control inflation. The Reserve Bank regulates the money supply by influencing its cost--i.e., interest charged on loans to other institutions. It is technically independen t of government control, but in practice it works closely with the Treasury and helps to formulate and to implement macroeconomic policy. The Reserve Bank issues banknotes and is responsible for the sale and purchase of foreign exchange for the government , as well as for the administration of the treasury-bill tender system. Its major customers are government agencies, private banks, and discount houses, although it also performs clearinghouse functions for private banks and assists banks that experience liquidity problems. Finally, the Reserve Bank is the authorized buyer of gold bullion, thereby acting as agent for the gold-mining industry in effecting sales on their behalf in the private market.

The Reserve Bank uses monetary policy to control inflation, primarily by adjusting the liquid-asset requirements of private banking institutions and by restricting bank credit in order to control consumer demand. Until 1975 the bank enforced fixed int erest rates on long-term government securities, but thereafter it allowed transactions at market-related prices. Direct control over deposit interest rates quoted by banking institutions was abolished in 1980; nevertheless, the Reserve Bank still exercise s considerable indirect control through its own bank rate.

The private banking sector was controlled by commercial banks until the 1950s when banking services began to diversify. Until then, commercial banks had avoided services such as personal loans, property leasing, and credit-card facilities. New institu tions--including discount houses, merchant banks, and general banks--emerged to meet this demand, and in reaction to these changes in the banking sector, commercial banks increasingly entered into medium-term credit arrangements with commerce and industry and acquired interests in hire-purchase firms and leasing activities. In addition, they expanded their operations into insurance and even invested in manufacturing and commercial enterprises.

During the late 1980s, the "big five" commercial banks--First National Bank (formerly Barclays), Standard Bank of South Africa, Nedbank, Volkskas, and Trust Bank--were increasingly challenged by building societies, which had listed holding companies o n the Johannesburg Stock Exchange (JSE) and had set up commercial and/or general banking arms. The Deposit Taking Institutions Act of 1991 formalized the overlapping of functions between the banks and the building societies that had existed for more than a decade. The act brought South Africa into line with internationally recognized standards for capital requirements.

In February 1991, four of the country's leading financial institutions--Allied Bank, United Bank, Volkskas, and Sage Banks--merged to create the largest banking group in the country, the Amalgamated Banks of South Africa (ABSA), with assets of R56 bil lion. ABSA, which merged with a fifth bank in 1992, is jointly controlled by the Rembrandt tobacco group and the South African National Life Assurance Company (Sanlam), the country's second-largest insurance group. The banking industry is undergoing furth er reorganization in the mid-1990s, in part to establish banking services in poor communities that were neglected under apartheid.

Data as of May 1996

South Africa - TABLE OF CONTENTS

  • The Economy

  • Go Up - Top of Page

    Make allRefer Reference your HomepageAdd allRefer Reference to your FavoritesGo to Top of PagePrint this PageSend this Page to a Friend


    Information Courtesy: The Library of Congress - Country Studies


    Content on this web site is provided for informational purposes only. We accept no responsibility for any loss, injury or inconvenience sustained by any person resulting from information published on this site. We encourage you to verify any critical information with the relevant authorities.

     

     

     
     


    About Us | Contact Us | Terms of Use | Privacy | Links Directory
    Link to allRefer | Add allRefer Search to your site

    allRefer
    All Rights reserved. Site best viewed in 800 x 600 resolution.