New Zealand’s handling of policymaking regarding its central bank holds lessons for SA when it comes to plans to nationalise the Reserve Bank, writes Hlengani Mathebula
New Zealand’s handling of policymaking regarding its central bank holds lessons for SA when it comes to plans to nationalise Reserve Bank, writes Hlengani Mathebula
There have been suggestions that the Reserve Bank should finance the budget by buying government bonds, a proposal most recently backed by none other than the deputy minister of finance. My purpose today is to focus on what South Africa can learn from New Zealand about public policymaking, especially as it relates to the Reserve Bank.
In the first instance, no shareholder or their associates can directly or indirectly own more than 10 000 shares in the Reserve Bank. The other business of shareholders at the AGM is the consideration of the minutes of the previous annual meeting, the appointment of external auditors and the approval of the remuneration of auditors for the financial year just ended.
The process was split into two phases, the first focusing on improving the bank’s monetary policy framework.These included the decision requiring monetary policy decision-makers to give due consideration to “maximum sustainable employment” alongside price stability – the so-called dual mandate. The minutes of the panel’s two meetings were also published. All of the advice received from experts other than the panel was also made public and can be read on the New Zealand Treasury website.The panel has been expanded to add more relevant expertise. Phase two exhibits the same level of transparency.
As the New Zealand approach shows, government can go several steps further. It should appoint a panel of experts to interrogate the nationalisation decision – its benefits to South Africa as well as its risks. This happened when the Bank of International Settlements, commonly referred to as the central bank of central banks, bought out private shareholders.
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