Special Hearings — Business Hearings — 1997-11-12

DR BORAINE: Thank you, Dr Stals and I must say I found the presentation today very helpful.
 I've gone through the submission, but I confess immediately I'm not a banker and it takes a little while to absorb some of the intricacies of that and I think we are trying to understand the role of various groupings and institutions in the period 1960 to 1994 and you've certainly, I think, put your finger on most of that in your much more brief presentation and less formal.
 In that presentation you make the point that the bank is proud of its record of strict professionalism since 1921.  There are people who would argue that the Reserve Bank was part and parcel of the Apartheid Government and that it was dominated or directed by a political agenda.
 I specifically braise this, because immediately prior to your presentation, there was another presentation where there was quite sharp criticism of the Reserve Bank and I think it's only fair that I should inform you of that and to give you an opportunity to respond to it, because what we're trying to do is to get at the truth.
 So, broadly speaking, would you argue that the Reserve Bank maintained its impartiality and its professionalism throughout the period with no interference from the National Party Government?

DR STALS: I might again emphasize that we're talking about a long period of time of more than 30 years.  There four different governors of the bank.  There were many Ministers of Finance and the relationship between the Reserve Bank, Government is very much determined by personalities involved;  by the governor, by the Minister, by the head of state, but I think it is certainly true to say in general that my predecessors, the people I knew in the Reserve Bank, the experience I've had with the Reserve Bank, the bank always stayed outside of the political agenda.
 Yes, certainly from time to time political influences did make decisions in the Reserve Bank more difficult on interest rate changes, but the general attitude, approach, philosophy of the Reserve Bank has always been to be an independent institution outside of the political world.
 I would certainly not agree that the Reserve Bank was at times or over the period as a whole dominated by a political agenda;  that I certainly do not believe is true.  I think the evidence is there.  The many many instances where the Reserve Bank had to take unpopular decisions on monetary policy that were not only unpopular with the people of South Africa, but also with the politicians in South Africa.
 May I again say;  our experience has learned us over many years that where you stand on monetary policies determine the way you sit.
 So, of many of the criticisms against the Reserve Bank, tell me who it is and tell me where he said so and then it will be easier to explain it and understand it.

DR BORAINE: Thank you very much.  The - perhaps it would be helpful for us to try - for the Commission to try and understand;  there was a debate over the last couple of years or perhaps since the early '90's with the transition alluring ahead and the obvious possible change of Government.
 There was a lot of debate as to whether the Reserve Bank should be independent or should be simply a part and parcel of the Parliament of the day.  Have you seen any changes in your view, as to the way the bank operates now and say as it operated in the late '80's, early '90's?

DR STALS: I would say - again the so-called independence of the Reserve Bank, Government is responsible for determining broad macro-economic policy objectives.
 Within that frame work the Reserve Bank then has a certain role to play and Government also gives the instruction to the Reserve Bank;  what that role must be.
 In the case of South Africa, I think it is the right way to do it.  Government gave the instruction very clearly to the Reserve Bank in the constitution of the Republic of South Africa in the South African Reserve Bank act;  that it's your function and your responsibility to protect the value of the currency to make sure that we have a stable financial environment.
 So, the independence of the central is operational independence on how to achieve the objectives that the Government set for the Reserve Bank.
 You ask me whether there is any difference.  Well, I've been governor for about eight and a half years now and I think the present Government has always shown great respect for this autonomy of the Central Bank and for the position of the Reserve Bank to achieve or to strive to the objective of financial stability, determined by Government, but left to us on how we should do it.
 The present Government has always shown great respect for this autonomy of the Reserve Bank and I will say my experience is that we have experience, enjoyed a greater degree of autonomy and independence over the past eight years than during many other times in the preceding 30 years or so.

DR BORAINE: Thank you.  I only have two final questions and that is;  many people who have come before us over the last two days, particularly from the so-called Black organisations have been critical of business in terms of the appointment of senior people in their institutions.  Independent companies, the corporate sector generally, the same criticism has been levelled against some banking institutions including the Reserve Bank.
 Is this you think, a fair criticism and is it changing or how do you see it?