run in terms of real growth or employment by accepting higher inflation rates. the opposite is more likely to be true. higher inflation will in the long run militate against growth and job creation. the objectives of external balance, growth and employment will over time be served best by creating and maintaining a climate of reasonable domestic price stability ”. ( par 47 ) 2. the changing financial environment the deliberations of the de kock commission took place in an overall sociopolitical and economic environment that was completely different from what we have to contend with in south africa today. with his wisdom and his foresight, gerhard de kock may have envisaged, and surely wished for, an environment in which monetary policy could be applied without the shackles of sanctions, boycotts, exchange controls, high inflation, social unrest and political distortions that characterised the period of his domain. over the past decade, the situation has changed dramatically. the major socio - political reforms of the early 1990 ’ s opened up the way for a normalisation of south africa ’ s position in the world environment. also in the field of economic and financial relations, south africa has been reintegrated in the international community from which it was excluded over the preceding two decades. the international economic punitive actions against south africa were repealed in great haste after the government of national unity took power in april 1994, and south africa took its rightful place again in international forums such as the united nations, the bretton woods institutions ( imf and world bank ), the organisation of african unity, and the british commonwealth of nations. south africa became reintegrated into a world financial system that was vastly different from the one it had left in the late 1970 ’ s and early 1980 ’ s. the explosive developments during its absence in electronics and in communications, and the revolutionary trans - formation from mainly manufacturing / trading economies to a new service / information based culture, led to a strong movement of globalisation in financial market activity. this process forced the liberalisation of domestic and international financial markets in many countries, led to the abolition of exchange controls and exposed countries more directly to the disciplines of international markets. today in south africa, there are more than 60 foreign banks that compete through representative offices, branches and subsidiaries with the domestic banks to provide financial services to the south african community. we are in the process of gradually removing our exchange controls to join the other approximately 60 ( out of 185 ) countries of the world, that have already succeeded

the sector. the broad principles for transformation have been agreed on, and targets are currently being considered for various categories of transformation. these include ownership transfer, employment equity, procurement, access to financial services, low - income housing finance, sme finance, agricultural finance and infrastructure finance. of critical importance for the south african reserve bank is that the charter should assist rather than hamper the stability of south africa's banking and financial sector which is one of the important responsibilities of the reserve bank. the bank supervision department at the bank uses a risk - based approach to supervision and is of the opinion that the transformation charter should contribute to these risk management principles. the critical challenges for black business in the financial sector are to ensure equitable empowerment within the context of a stable and growing sector, that maintains and solidifies its international standing. a critical category within this is that of ownership transfer. this is currently being considered very carefully and will encompass both direct and indirect ownership of financial institutions by black people. another issue in the transformation arena is the involvement of black auditing firms in the auditing of banks. because of the importance of banks in the financial system, several requirements are placed on audit firms before they may engage in the audit of a bank. these requirements are necessary and onerous because of the highly specialised nature of banking activities and include issues such as experience and resources, and these are seen to be preventing black audit firms from participating in the audits of banks. the bank supervision department and the financial services board have embarked on a project to investigate possible options on how to engage smaller black audit firms in the audits of banks and other financial institutions. options being considered include the subcontracting of parts of an audit to smaller empowerment firms so that they are able to gain the appropriate experience required to audit banks and financial institutions. the south african reserve bank is leading by example in this regard. our bank is now audited by pricewaterhousecoopers, deloitte and touche and sizwentsaluba vsp inc, the latter being a black auditing firm. 10. conclusion indeed it has been my pleasure to participate in this forum. i hope i have shed some light on the issues that are currently occupying the efforts of the south african reserve bank. it is correct to say that ultimately the functions of the reserve bank are to make a contribution towards an environment which would see the growth and prospering of a black business class ; the improvement in economic and social conditions of the