countries lean on could worsen poor economies ’, bloomberg quint, available at https : / / www. bloombergquint. com / global - economics / a - mother - of - all - sudden - stops - leaves - emergingmarkets - in - crisis. 9 philippe burger and estian calitz, 24 february 2020, ‘ soaring deficits and debt : restoring sustainability amidst low economic growth ’, available at https : / / www. econ3x3. org / article / soaringdeficits - and - debt - restoring - sustainability - amidst - low - economic - growth. page 6 of 16 the proposals on the table for more bond buying are not modest. i have seen one call for a trillion - rand fiscal stimulus financed by the sarb10, and another for sarb bond purchases of r10 - 20 billion per week to continue until ‘ economic recovery is well underway ’ 11. these numbers imply that the sarb would be buying, more or less, all new debt for the foreseeable future. such interventions would crowd pension funds and other institutional investors out of the bond market. worse, we would be sending a dangerous signal. the crisis of the euro area, a few years back, showed how damaging it can be for countries to send mixed messages about their future monetary arrangements – the so - called ‘ re - denomination risk ’. in south africa, the risk is that the domestic currency will no longer be issued by a credible, inflation - targeting central bank, but by one that is fully financing the public sector instead. should we be going this way, some bondholders would probably be enthusiastic about a large bond purchase programme so they could dump their bonds on the sarb and minimise their losses. and why shouldn ’ t they be looking for a way out? imagine the situation : we would be taking over public sector financing, with no clear plan for how to stop buying a potentially ever - larger issuance of bonds. and although i have heard it suggested that we should do qe with conditions, we need to keep in mind that we are a national central bank. 12 the constitution tells me the sarb must protect the value of the currency, and that we must have regular discussions with the finance minister. nowhere does it say i can set conditions. as such, the sarb cannot take responsibility for solving a fiscal sustainability problem, nor can it jeopardise the value of the currency by agreeing to inflationary money printing. 10

and economic decision - making ; enhances the efficiency of financial intermediation ; minimises the inflation risk premium in long - term interest rates ; reduces the incentive to hedge against inflation ; promotes a more equitable distribution of wealth and income ; and facilitates investment decision - making. a monetary policy that maintains financial stability in a credible and lasting way will accordingly make the best overall contribution to improving economic growth, employment and living standards. a market - oriented strategy will be followed to achieve this overriding goal of monetary policy because financial institutions and markets function best in the national interest if they are competitive, active and liquid, and if interest rates and exchange rates are flexible. the reserve bank will accordingly continue to discuss with government the relaxation of exchange controls when underlying conditions are conducive to taking such steps. the eventual removal of exchange control restrictions should contribute towards dismantling the oversold forward book and reducing the net open foreign currency position. once residents have accumulated large amounts of foreign assets, they could use these assets to counterbalance short - term currency volatility if they perceive this to be an opportunity to profit from a temporary undervaluation of the exchange rate. in pursuit of the primary objective of price stability it is essential, as stated in the constitution, that the reserve bank performs its functions independently and without fear, favour or prejudice. the bank will maintain an attitude of economic - professional objectivity, but will, of course, at the same time be accountable to parliament and the general public for its actions. transparency in the interpretation of economic data and the monetary policy stance will be promoted further. regular reporting on economic conditions and reserve bank operations to parliament and the general public will receive high priority. although the bank will strive to achieve closer cooperation and coordination with the authorities responsible for policy decisions in other macroeconomic and microeconomic fields, the autonomy of the bank will be preserved. there are structural deficiencies in the economy which impair saving, investment, production growth and employment creation and increase the level of real interest rates. a number of initiatives announced by the president at the opening of parliament are aimed at easing these supply - side constraints. the implementation of these structural changes could create further scope for lower nominal and real interest rates. closer cooperation and coordination between the reserve bank and other national official bodies may expedite this process. the southern african development community ( sadc ) provides an opportunity for member states to face jointly the challenges of global financial integration. considerable progress has been made over almost four