tt mboweni : inflation, growth and employment opportunities lecture by mr tt mboweni, governor of the south african reserve bank, at the department of economics, university of stellenbosch, stellenbosch, 6 march 2003. * 1. * * introduction members of the portfolio professors, staff, students, ladies and gentlemen and select committees on finance, deputy vice - chancellor, it is very pleasant to be on this side of the beautiful hex river mountains and to speak to you on a number of issues right at the core of central banking. the accusation is often heard that central bankers have narrowed the world down to inflation, and do not have an open mind on any other matters. not true! the way in which these matters come together - the principles behind their interaction - will be central to my talk to you today. 2. the magnitude of the challenges facing our economy starting with a longer - term picture of inflation, it is a well - known fact that the double - digit inflation which reigned from 1974 to 1992 left considerable scars on our economy. its redistributive impact was nasty, with the buying power of the most vulnerable groups in society, the poor and the elderly, in particular being undermined. the plight of a pensioner who retired twenty years ago using interest on a fixed deposit to provide for himself or herself is illustrated by the cost of a basket of consumer items which cost r100 in early 1983. the cost of that basket shot up to r380 in early 1993, and currently amounts to r815. although inflation has receded to single - digit levels and has averaged around 7, 8 per cent per annum over the last ten years, this is still enough to very significantly erode the living standard of the most vulnerable groups in our society over time. some distortions therefore remain, leading to frictions and misallocation of resources. high unemployment continues to characterise the south african labour market. based on the responses of a representative sample of 30 000 households sampled in the february 2002 labour force survey, statistics south africa puts the official unemployment rate at 29, 4 per cent. the absolute number of the unemployed amounts to 4, 7 million people. and these are people who are looking for jobs - it does not cover those who have given up. the opportunity cost to our economy is huge : even if each of them would only produce goods and services to the amount of r650 per month ( the equivalent of the minimum wage in

. powerful and super - fast processors, cheaper computing power, wide availability of access devices, and the roll - out of high - speed broadband have created an environment primed for a burst of innovation and ideas. due to these rapid advances in technology, there has been an increasing effort to take advantage of these developments in service offerings, including within the financial services sector. the emergence of fintech, that covers digital innovations and technology - enabled business model innovations in the financial sector, also presents exciting opportunities. examples of innovations that are fundamental to fintech today centre around value provision in the lending environment, value storage in the form of wallets and tokens, value protection in the form of insurance and investments, as well as value transfer in the payments and remittances areas. cryptocurrencies that utilise block chain technologies, new digital advisory and trading systems, artificial intelligence and machine learning, peer - to - peer lending, equity crowdfunding and the internet of things are some of the better - known developments that are normally cited. the drivers of international organization of securities commissions ( iosco ). 2017. ‘ research report on financial technologies ’. available at https : / / www. iosco. org / library / pubdocs / pdf / ioscopd554. pdf. page 2 of 9 these developments, from the demand side, emanate from shifting consumer preferences and an expectation for more, faster and cheaper services. from the supply side, they emanate from opportunities presented by evolving technology, as well as the changing regulatory environment. currently, there is intense global interest in these developments, as is evident from numerous research initiatives, consourtium efforts, collaborative bank experimentations, venture capital deployment, as well as a number of central bank projects. according to the bank for international settlements ( bis ) working paper on the fintech opportunity 3, these innovations may : a ) disrupt existing industry structures and blur industry boundaries ; b ) facilitate strategic disintermediation ; c ) revolutionise how existing firms create and deliver products and services ; d ) provide new gateways for entrepreneurship ; and e ) democratise access to financial services although fintech enterprises have changed the way in which financial services are structured, provisioned, and consumed, they have not acquired dominance yet. they do, however, have the potential to significantly change the competitive landscape. the world economic forum 4 ( wef ) highlights eight factors that have the potential to alter the competitive