development of banking and financial systems, including promotion of african banking networks. - promotion of sub - regional and regional stock exchanges. - strengthening and harmonisation of banking and financial supervision and regulation. - observance of the following macroeconomic indicators by year 2008 : • budget deficit / gdp ratio not exceeding 5 per cent. • central bank credit to government not exceeding 10 per cent of previous year's tax revenue. • single digit inflation rate. • external reserves / import cover of at least 3 months. • reduction of current account deficits ( excluding grant ) as percent of gdp to sustainable level. • pursuit of debt reduction initiatives on public debt as percent of gdp to sustainable level. • achieving and maintaining high and sustainable rate of growth of real gdp. stage iii ( year 2009 - 2014 ) assessment of macroeconomic performance and negotiation for the establishment of a common central bank ( year 2015 ). at this stage, countries would be required to consolidate achievements made at the third stage. the activities under this stage would include : - continued observance of macroeconomic indicators of convergence including : • inflation rate of less than 5 per cent. • overall budget deficit / gdp ratio ( excluding grants ) of less than 3 per cent. • elimination of central bank financing of budget deficits. • external reserves of equal to or more than 6 months of imports of goods and services. • reduction of current account deficits ( excluding grant ) as percent of gdp to sustainable level. • pursuit of debt reduction initiatives on public debt as percent of gdp to sustainable level. • achieving and maintaining high and sustainable rate of growth of real gdp. - assessing the macroeconomic indicators of each country / sub - region against the convergence criteria. a comparative analysis would be made thereafter to the convergence council. - commissioning of a study on the establishment of an african exchange rate mechanism ( 2010 ). - review of commissioned study on the african exchange rate mechanism ( 2011 ). - observance of the following macroeconomic indicators by year 2012 : • budget deficit / gdp ratio not exceeding 5 per cent by 2012. • elimination of central bank credit to government. • external reserves / imports cover of equal or greater than 6 months. - finalisation of arrangements required for the launching of the african monetary union. - this is the completion stage before the take off of the common central bank. the following activities are expected to be undertaken : • preparation of institutional, administrative and legal framework for setting up the common central bank and currency of the african monetary

t t mboweni : transparency and the public understanding of monetary policy address by mr t t mboweni, governor of the south african reserve bank, at the annual banquet of the institute of bankers, johannesburg, 6 march 2001 * 1. * * introduction good evening ladies and gentleman. i thank you for inviting me here this evening to speak at this prestigious event. the institute of bankers is an important organisation and encompasses an industry that is, as i am sure you are well aware, crucial to the south african reserve bank as a partner in our commitment to maintain and enhance the stability of the country ’ s financial sector. my remarks this evening centre on " transparency and the public understanding of monetary policy ". the public understanding of what we aim to do at the reserve bank is something that concerns us deeply. it is something that should go hand in hand with the work of the bank and it is central to the bank ’ s commitment of making monetary policy transparent to the people affected by it – the citizens of south africa. first i will discuss the reserve bank ’ s monetary policy framework and the developments that have occurred in this area recently. i will then move onto the institutional arrangements for the conduct of monetary policy, the work of the monetary policy committee and the bank ’ s modelling and forecasting activities. finally, i will say a few words about the central objective of the south african reserve bank. 2. the monetary policy framework we announced the adoption of the inflation targeting monetary policy framework in february just over a year ago. the formal adoption of an inflation targeting framework indicated a shift from the previous informal policy framework. in the past, monetary policy had embraced an eclectic approach in which recognition was formally given to a medium to longer - term stance of monetary policy by monitoring developments in a number of financial aggregates and not only money supply and bank credit extension. the eclectic approach to monetary policy was applied during the 1990s, against the background of explicitly articulated guidelines for money supply growth. this framework recognised that the reserve bank had to combat inflation, as outlined in the constitution and the reserve bank act. however, since the bank ’ s policies had their most direct impact in the area of money and credit, intermediate guidelines were set for growth in money supply. it was argued that if money supply growth could be contained, too much money would not be chasing too few goods, and inflation would be brought under control. while formally it was stated that broad money supply growth should fall in the range of 6 to 10 percent