Statement by Mr Mboweni at his inauguration as new Governor
of the Reserve Bank of South Africa
Statement by Mr Tito Mboweni on the occasion of the retirement of Governor Chris Stals as Governor
of the South African Reserve Bank and his inauguration as new Governor, held in Midrand on
7 August 1999.
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...
Esteemed guests
Ladies and gentlemen,
It is a privilege and an honour to have you all here as guests of the South African Reserve Bank as we
say goodbye to Dr Chris Stals, who was Governor of the Reserve Bank for ten years, and as we also
mark the start of my term as Governor. I am particularly pleased that all of you people with busy
schedules have come from near and far to be with us on this occasion.
A special note of thanks to the President of the Republic, Professor Stanley Fischer from the
International Monetary Fund, Mr Bill McDonough, President of the Federal Reserve Bank of New
York, Mr Urban Bäckström, Governor of the Central Bank of Sweden and also President of the Bank
for International Settlements, Mr Adriano Maleiane, Governor of the Bank of Mozambique and other
central bank governors who are here tonight. Thank you to those of you who battled to rearrange your
diaries to be with us tonight. Thank you once again.
Tonight we say farewell to Dr Chris Stals, with whom I have worked closely over the past year but
whom I have known since 1988. I have come to know Dr Stals as a committed central banker of
international stature, a truly new Voortrekker who did not shy away from contributing his best to the
new South Africa. Thank you, Dr Stals, for your lasting contribution and for showing such
commitment during this smooth transition.
We are also bidding a fond farewell to Dr Chris de Swardt, an Afrikaner gentleman par excellence
who was Deputy Governor, and whose career at the Bank also spanned some 44 years. This man is an
example of how one should relate to and treat other human beings. Although our association was brief,
I will treasure our association for a long time to come.
We wish both of you well in your retirement.
It is a most interesting and demanding time to be Governor of the South African Reserve Bank. It is a
time when the costs and benefits of globalisation are under scrutiny, not just by policymakers, but also
by ordinary citizens.
Emerging markets globally have experienced financial turmoil which plunged many into deep
recession. South Africa, though resilient, has not emerged from this turmoil unscathed. At only 0.5%,
the rate of growth in gross domestic product last year fell woefully short of the levels needed in a
country where poverty and joblessness remain widespread and where tackling these issues remain
priorities for all of us.
Against this background, it is hardly surprising that people sometimes hope that the Reserve Bank will
take action to stimulate economic growth by printing money. Some people think that, as a former
Cabinet Minister, my appointment heralds the start of a cheap money era in the Bank. I must say it
here, loud and clear, they are wrong.
Our view has been, and will continue to be, that it is not our role to provide an artificial stimulus for
the economy. The role of the Bank is to create a climate of financial stability in which sustainable
economic growth and wealth creation can be achieved; an environment in which an economic boom
will not be followed by an inevitable bust.
We are not Icarus; there is no need to fear that we will fly too close to the sun.
Tonight is not the appropriate occasion to spell out our detailed approach to monetary policy or its role
in the South African economy. However, we are not going to try to rewrite the monetary policy
textbooks or reinvent the wheel. The principles of sound and prudent central banking are the same the
world over and will not be fundamentally changed by any central bank governor, no matter how
energetic or enthusiastic, let alone how young.
The details of our approach will be spelt out in the Governor's Address at the Annual General Meeting
of the Bank on the 24th of August. However, whatever we say then will be in accordance with the
principles of sound and prudent monetary policy frameworks that have been tested in a global context.
Central banks follow different approaches to their monetary policy frameworks. Some central banks
have adopted currency boards to fix their exchange rates, while others follow exchange rate targeting
or inflation targeting. We will design our approach bearing in mind our particular experiences and
history, as well as taking into account international best practice which has delivered financial stability
and acceptable levels of inflation.
South Africa has been exposed to the recent turmoil in financial markets but has emerged, whilst a
little bruised, both stronger and wiser. We, like other countries, have learnt important lessons and will
put our experience to good use.
We know that if we want to benefit from globalisation in the form of sustained foreign capital inflows,
we should constantly think of ourselves as citizens of the global village. The strength of the United
States economy and trends in financial markets in New York, London, Tokyo and elsewhere will be
significant factors in influencing whether or not South Africa realises its economic potential. But we
must not underestimate our own responsibility as South Africans to develop our own potential and to
run our economy responsibly and efficiently.
As citizens of the global village, we must continue to participate actively in the debate on improving
the international financial architecture in the hope that a way can be found to minimise the intensity of
financial shocks to emerging and developed markets alike.
After a long, stimulating and challenging year which I have spent navigating the transition from
Cabinet Minister to central banker and getting to know my colleagues in South Africa and other parts
of the world, I am looking forward to starting officially next week with enthusiasm and confidence,
inspired in no small part by many of you present here tonight. We are fortunate that the South African
Reserve Bank is staffed by well qualified, committed and loyal people.
To the President, the members of the Board of Directors of the Bank, my colleagues the Deputy
Governors, management and staff, and esteemed guests: sweswi hi ngene eka nkari wa
mahlambandlopfu (we are now entering the time of the day when the elephants go washing; that is, the
crack of dawn).