The Reserve Bank's powers are, however, restricted to the area of money creation and financial activities related to this very important function conferred upon central banks in all market economies. The Reserve Bank therefore operates mainly in the financial system in pursuing its objective of protecting the value of the currency. Money plays a vital role in the market economy. As a means of payment, it facilitates the exchange of goods and services which would, without money, only be tradeable in complex barter deals. As a store of value, it enables purchasing power to be accumulated and to be held for future use.
Money indeed enables the market economy to work.
The task of the central bank to protect the value of money is therefore indeed an assignment to protect the market economy. The ability of banks to create money is, in turn, dependent on the amount of primary money that the Reserve Bank will at any time be prepared to make available to them. The measurement of the money supply, the appropriate definition of the money supply, and the relationship between central bank primary money and the total money supply, are subjects economists like to argue and disagree about, often to the confusion of the general public. Most economists that support the principles of the market economy will agree, however, that in the fight against inflation, the money supply does matter, and that it is important for the central bank to exercise some constraint on the amount of money that is being made available for spending. The South African Reserve Bank therefore sees it as its main function in pursuing its objective of fighting inflation to control the rate of increase in the money supply.