| Financial System, Markets
and Instruments, Monetary Policy, Business Understanding
South African Financial Markets, Cecilia
van Zyl; Ziets Botha; Peter Skerritt; Ingrid Goodspeed
3rd edition, 2009
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Topical:
Rand strength, reserves and capital controls
The increase in the Reserve Bank’s gross gold and foreign exchange
reserves exceeded even our bullish estimate, increasing to USD43.2bn
from USD42.2bn in June. The surprise was largely a result of a
higher-than-expected increase in foreign deposits received from the
government, to the tune of USD480m. The USD956m increase in gross gold
and foreign exchange reserves is ascribed to: * a hefty USD1.127bn
increase in foreign exchange reserves, of which USD480m (USD661m in
June) is ascribed to an increase in government’s foreign deposits.
Valuation effects accounted for some USD614m of this rise (the euro
and the pound appreciated by 7% and 4%, respectively, against the
dollar in July). We estimate that, while SARB purchases of foreign
exchange may have amounted to around USD33m. * an USD83m increase in
SDR holdings, * which was partly offset by a USD254m decline in gold
reserves, owing to the softer gold price in the month. Rand strength
provided a fitting ground for reserves accumulation in the month,
driven predominantly by government. This trend should continue in
coming months, while the Reserve Bank is seen largely on the sidelines
for now. The rand’s current strength has opened up the wounds of
debate around intervention and capital controls. ... [Standard
Bank] 0806 |
For
information on institutions active in financial markets, e.g. the JSE
Securities Exchange, banks and brokers, see the section on Financial
institutions.
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Information
on the SA budget is indexed in the Economic
information section |
July
2010 |
SA Reserve
Bank - Statement of the Monetary Policy Committee |
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... The CPI
forecast of the South African Reserve Bank (the Bank) indicates a
relatively unchanged forecast compared with that presented to the
previous meeting of the Monetary Policy Committee (MPC). CPI inflation
is expected to average 4,5 per cent in the third quarter of 2010, and
then increase moderately thereafter. Inflation is expected to remain
within the target range during the forecast period, and to measure 5,3
per cent in the final quarter of 2012. Despite the persistent
moderation of inflation within the target range, inflation
expectations have remained relatively elevated, albeit with a slight
downward trend. According to the survey of inflation expectations
conducted by the Bureau for Economic Research (BER) at Stellenbosch
University during the second quarter of 2010, average inflation
expectations for both 2010 and 2011 have declined by 0,2 percentage
points to 6,3 per cent and 6,5 per cent respectively, but have
remained unchanged at 6,8 per cent in 2012. Financial analysts are the
only category of survey respondents that expect the inflation target
to be achieved during the forecast period. ...
Monetary policy stance: The Monetary Policy Committee assesses the
risks to the inflation outlook as being evenly balanced and views the
current monetary policy stance as appropriate. Therefore, the MPC
decided to keep the repurchase rate unchanged at 6,5 per cent per
annum. The committee is aware of the fragilities and vulnerabilities
to the domestic economy, driven in part by global uncertainties. The
committee will continue to assess economic and financial developments
and should circumstances warrant it, the appropriate response will be
taken, consistent with the Bank’s inflation targeting mandate. ... more
Also see Comment
(PDF) from Nedbank
MPC meetings during 2010 are scheduled for: 25 & 26 January 2010;
24 & 25 March 2010; 12 & 13 May 2010; 21 & 22 July 2010; 8
& 9 September 2010; and 17 & 18 November 2010.
The eight-member
Monetary Policy Committee (MPC) comprises the Governor, Ms
Gill Marcus; the Deputy Governors, Dr XP Guma, Dr Renosi Mokate; and Mr A.D. Mminele;
the Executive General Managers,
Mr Bertus van Zyl and Dr M. Mnyande; and Mr Brian Kahn, Senior Deputy Head: Research and Policy
Development, Research Department.
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May
2010 |
SA Reserve
Bank - Monetary Policy Review |
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The global
economic recovery has progressed more rapidly than expected in the
period since the previous Monetary Policy Review was published in
November 2009. However, activity is recovering at varying speeds in
different regions, and significant risks and uncertainties continue to
threaten global financial markets. Concerns regarding the solvency of
a number of countries in the euro area have threatened to transform
the initial banking crisis into a sovereign debt crisis, which could
have systemic implications for the global economy. The domestic
economy, after contracting for three successive quarters, recorded
consecutive quarters of positive growth in the second half of 2009,
and is expected to sustain this stronger performance in 2010 and 2011.
Inflation has continued to trend downwards in recent
months. Headline inflation has moved to within the inflation target
range of 3 to 6 per cent for the first time since April 2007 when a
year-on-year increase of 5,9 per cent was recorded in October 2009.
After again breaching the upper limit of the inflation target range
for technical reasons in December 2009 and January 2010, inflation has
moved back to within the target range on a sustainable basis since
February 2010.
In this Monetary Policy Review the latest
developments in inflation and the factors that impact on inflation are
analysed. Recent monetary policy developments are reviewed, and the
outlook for inflation and the inflation forecast are presented. In
addition, two topical issues are addressed in boxes. The first box
reproduces the clarification of the mandate of the South African
Reserve Bank (the Bank) issued by the Minister of Finance, Mr P J
Gordhan, in February 2010. The second box reports on research
undertaken on exchange rate pass-through at the disaggregated level in
South Africa using two distinct panels of data. ... more |
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June
2009 |
Bank
for International Settlements - Annual
Report 2008/09 |
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In its 79th
Annual Report, the BIS looks at the narrow path ahead leading out of
the financial crisis. The Report underlines the need to focus clearly
on the medium term and on sustainability when designing both
macroeconomic and financial policy responses. The report was presented
at the Bank's Annual General Meeting in Basel, Switzerland on 29 June
2009. |
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April
2009 |
Bank
of England - Rethinking
the Financial Network 
(PDF) |
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Andrew Haldene,
Executive Director, Financial Stability, Bank of England, produced an
interesting paper which considers the financial system as a complex
adaptive system. It applies some of the lessons from other network
disciplines - such as ecology, biology and engineering - to the
financial sphere. Peering through the network lens, it provides a
rather different account of the structural vulnerabilities that
built-up in the financial system over the past decade and suggests
ways of improving its robustness in the period ahead. |
March
2007 |
SA Reserve
Bank - Macroeconomic
Policy Challenges for South Africa Conference, 22-24 October
2006 |
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The following
conference papers have been provided:
 | Forword |
| Message of the Chairperson |
| Global financial imbalances and their resolution:
Implications for financial stability by David T Llewellyn |
| Sustainable macroeconomic balance and the
implications for monetary policy in South Africa by Iraj Abedian |
| A New Keynesian Phillips Curve for South Africa
by Stan du Plessis |
| The South African current account in the context
of South African macroeconomic policy challenges by Ben Smit |
| The impact of oil price shocks on the South
African macroeconomy: History and prospects by Jeremy J Wakeford |
| Why speed doesn't kill: Learning to believe in
disinflation by E Schaling |
| Potential screening in South Africa’s labour
market Steven F Koch |
| South Africa's role in macroeconomic convergence
in SADC by Jannie Rossouw |
| A vision for electronic card payments by Nick
Essame |
| Economic policy framework and asset price
dynamics by Nicola Viegi |
| Signalling currency crises in South Africa by
Tobias Knedlik |
| The relationship between South Africa's
macroeconomic stabilisation policies and the performance of the
various asset classes by Chris Harmse |
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August
2004 |
E van der
Merwe, SA Reserve
Bank - Inflation targeting in South Africa |
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Economists generally agree
that monetary policy should be primarily concerned with the pursuit of
price stability. However, they still differ on how this objective can
be achieved most effectively. This debate remains unresolved, but a
growing number of countries have adopted inflation targeting as their
monetary policy framework. In 1990 New Zealand was the first country
to implement this strategy. In February 2000 it was announced that
formal inflation targeting would also be adopted in South Africa as
the monetary policy framework. Before this announcement “informal
inflation targeting” was already applied by the South African
Reserve Bank. |
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November
2002 |
GR Wesso, SA Reserve
Bank - Broad money demand and financial
liberalisation in South Africa |
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Financial liberalisation and
changes in the technology of payments and settlements have led to
large volatilities in money demand worldwide. The South African
economy has also undergone a number of important structural changes
during the past two decades, including the relaxation of exchange
controls, financial innovations and the integration of the South
African financial market into the global financial markets. This may
have caused money demand functions to become structurally unstable. A
fixed-coefficient error-correction model for broad money demand (M3)
in South Africa was developed for the period 1971:1 to 2000:4. |
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October
2005 |
SA
Reserve Bank - System
of Accommodation |
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The main reason for the
operations of the South African Reserve Bank in the money market is to
implement the Bank's interest rate policy as determined by the
Monetary Policy Committee (MPC), with the aim of achieving the Bank's
inflation target. In its monetary operations, the Bank endeavours to
promote financial stability by managing the liquidity needs of the
banking system as a whole. It also contributes to the development and
efficiency of the domestic financial markets, in particular the
interbank market.
This is the ninth in a series of fact sheets on the South African
Reserve Bank |
January
2007
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ABSA Bank - Sectoral
Financial Ratios, 1997-2006 |
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Financial ratio analysis can be used
to compare the performance of one company with that of another in the
same sector, or to compare a company with the entire sector in which
it operates, or even to compare various sectors with each other, as is
the case in this publication.
Financial ratios are
calculated for each of thirty-seven JSE sectors over the
past ten years, except for the banking and life assurance sectors. These ratios are divided into six
categories: asset structure; funding structure; solvency
and liquidity structure; profitability structure; trading
activity structure; and share statistics. |
August
2006 |
Competition
Commission - public Banking
Enquiry |
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Following
on the findings in the research report The National Payment System and
Competition in the Banking Sector, the Commission announced earlier
this year that it would hold an enquiry in terms of Section 21 into
particular aspects of competition in banking. The enquiry has now
commenced and is to be conducted for the Commission by a panel,
appointed by the Competition Commissioner, consisting of Mr Thabani
Jali (Chairperson), Mr Oupa Bodibe, Mrs Hixonia Nyasulu and Mr Rob
Petersen SC.... more |
August
2006 |
Finweek
Magazine - Report
on Bank Charges
(PDF, 1 900 KB) |
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As
per the findings, when compared to Deloittes II, this year’s bank
charges increased by 15% on a ‘Pay As You Use’ basis and decreased
by 1% on the ‘Electronic Pricing’ package. ... more |
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April
2006 |
South African
Reserve Bank - National Payment System Vision
2010 |
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The first vision
for the National Payment System, was provided in 1995, This updated
vision contains strategic guidelines for the national payment system.
Entitled Vision 2010, the document provides high-level strategic
guidance for stakeholders, such as banks and non-bank participants, as
new and complex challenges face the national payment system and its
stakeholders.
The Vision addresses many of the issues raised in the report of the
Competition Commission, below, released at the same time. |
April
2006 |
Competition
Commission - The
National Payment System and Competition in the Banking Sector |
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The report
presents a comprehensive analysis of the national payment system
(NPS). It reveals that the South African NPS is a highly efficient and
sound system and perhaps more advanced than similar networks in more
economically developed countries. But an efficient and sound system
may nevertheless lack features which would make it also fair to
consumers. The report raises a number of concerns in this regard, and
provides some pointers. |
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September
2003 |
Economic
Society of South Africa - The
Suitability of Dollarisation as an Exchange Rate Regime for South
Africa
(PDF, 205 KB) |
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Conference paper. Countries
dollarise because of a lack of policy credibility and to obtain
monetary and economic stability by importing it from another country.
Although dollarisation may be suitable for some emerging countries,
South Africa does not belong to this group. The country suffers
neither from hyperinflation or continuous high inflation, nor from
policy incredibility. It furthermore has a low inflation pass-through,
a high level of integration in world financial markets, but does not
have a dominant trading partner or trade block. |
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September
2001 |
Patrick Meagher and Betty
Wilkinson - Filling
the Gap in South Africa’s Small and Micro Credit Market: An Analysis
of Major Policy, Legal, and Regulatory Issues
(PDF) |
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A report for the IRIS Center,
University of Maryland, submitted to the Micro Finance Regulatory
Council of South Africa (see the Regulation
& legislation section). The analysis describes small and
micro credit provision - in particular South Africa’s unique
microloan market - and addresses major issues that have emerged as
potential stumbling blocks in the country’s efforts to ensure
financial services to those who need them most. The paper outlines
some possible policy responses based on international “best
practices,” including the core elements of an institutional
framework for market governance and deepening.
Related entry: SMEs' Access to Finance in South Africa: A
Supply-side Regulatory Review, indexed in the Regulation
& legislation section. |
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January
1999 |
World Bank
- Microfinance
Handbook: An Institutional and Financial Perspective |
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The purpose of
this handbook is to bring together in a single source guiding
principles and tools that will promote sustainable microfinance and
create viable institutions. It provides a comprehensive source for the
design, implementation, evaluation, and management of microfinance
activities. The book has three parts: Part 1 takes a macroeconomic
perspective toward general microfinance issues and is primarily
non-technical. Part 2 narrows its focus to the provision of financial
intermediation, taking a more technical approach and moving
progressively toward more specific (or micro) issues. Part 3, the most
technical part of the handbook, focuses primarily on assessing the
financial viability of microfinance institutions. |
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JSE
- Understanding
Warrants |
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Describes:
| What are warrants? |
| Important aspects of warrants Types of warrants |
| Issuers of warrants |
| Trading and settlement warrants |
| How to start trading warrants |
| Risks in trading in warrants |
| The evaluation of warrants |
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SA Reserve Bank - The SA National Payment
System |
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The National Payment System is a broad
concept, which not only entails clearing systems, but
encompasses the total payment process - all the systems,
mechanisms, institutions, agreements, procedures, rules,
laws, etc. that come into play from the
moment an
end-user issues an instruction to pay another person or a
business, through to the final settlement between banks
at the SA Reserve Bank. The NPS thus enables the
circulation of money, i.e. it enables transacting parties
to exchange value.
The National
Payment System Act is provided.
The SA Payment Systems is described in the "Green Book" -
see The Africa Region
section.
E-money is an important
component of e-commerce - see the position of the SA
Reserve Bank on
Electronic Money. |
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January
2004 |
Werkmans - Business
Guide to South Africa |
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This publication
gives a brief overview of the investment climate, taxation, forms of
business organisation and business, accounting and legal practices in
South Africa. It reflects the general position in South Africa as at
September 2003, unless otherwise indicated. |
January
2004 |
Cliffe Dekker
- The
Way to BEE |
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This guide
highlights some of the issues that businesses must face in meeting the
challenge of empowerment.
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October
2002 |
Cliffe Dekker
- Commentary: Electronic
Communications and Transactions Legislation |
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In August 2002, South Africa's
President Thabo Mbeki signed the controversial Electronic
Communications and Transactions Bill into law.
Cliffe Dekker has prepared a commentary on the bill. See the Electronic
Communications and Transactions Act, 2002 (PDF; 2,7MB).
This is of interest to the South African IT industry and individuals
and companies in all sectors and around the world as they embark on
electronic commerce projects. Whenever you access a website or send an
e-mail or entertain a visitor to your own website or send a fax and
the other party is located in another legal jurisdiction, then your
action could potentially fall under the laws of that jurisdiction. The
issues and topics associated with the South African Act are pertinent
to legislation elsewhere.
This legislation fills an important void, particularly in the area of
electronic contracts, but there are concerns that some aspects are not
dealt with in sufficient detail, while other topics covered in the
much-debated Green paper have been excluded from the
legislation.
See the Electronic
Communications and Transactions Bill (PDF; 2,6MB) and also the Green Paper
(PDF) and, because e-money is an important
component of e-commerce, the position of the SA
Reserve Bank on Electronic Money.
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Books and information
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Understanding
South African Financial Markets
van Zyl, Botha & Skerritt
2nd edition, 2006 |
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A reference and
guide for commerce students, public servants and the business
fraternity, giving an overview of how the various institutions in the
South African financial system operate as well as of the different
financial markets in the economy and the instruments traded in those
markets.
Contents: Rudiments of the South African financial system; The South
African Reserve Bank; Banks; Microfinance institutions; Regulation of
the financial markets; Insurers; Retirement funds; Investment
institutions; Risk and return; The money market; The bond market; The
share market; The foreign exchange market; and Derivatives. |
