households than they do on the rest of the population. that is not because poorer households don ’ t borrow. rather, it is because they page 8 of 15 borrow at interest rates that are shaped by factors other than monetary policy, including higher costs of offering loans, higher risk of default, and lack of information about income. when interest rates go down, therefore, the more highly indebted and wealthier households save much more on interest costs than the poorer households do borrowing at microloan rates. this, by itself, worsens inequality. interest rates and asset prices now consider asset prices – a channel which is often poorly understood. as with borrowing costs, people tend to think that higher interest rates reward rich people who have savings. again, this intuition is misleading. in fact, much of the global debate about inequality and central banking rests on the exact opposite claim : that very low interest rates exacerbate inequality. 8 this is because lower interest rates raise asset prices, and an increase in asset prices benefits those people who already have assets. we have seen this play out in advanced economies following the global financial crisis : as central banks cut interest rates as low as possible, house prices, equity markets and bond prices all soared. the winners were the people who had already invested in those assets. those who lost out were younger people who couldn ’ t afford expensive homes, as well as savers who had their money in interest - bearing accounts. for example, see bridges and thomas ( 2012 ), ‘ the impact of qe on the uk economy – some supportive monetarist arithmetic ’, working paper no. 442, available at https : / / www. bankofengland. co. uk / - / media / boe / files / working - paper / 2012 / the - impact - of - qe - on - the - ukeconomy - some - supportive - monetaristarithmetic. pdf? la = en & hash = 81412e5177bce802f2d37ecf42d20144eeb9513d. page 9 of 15 as you can see, what really matters for the asset price / inequality channel is the distribution of wealth. who has assets? in many advanced economies, the middle classes tend to have substantial stocks of housing wealth, even if most stocks and bonds are owned by richer people. this means that higher asset prices don ’ t necessarily raise inequality, because enough people

speech by governor kganyago on the occasion of the announcement of the winners of the monetary policy committee ( mpc ) schools challenge 17 august 2018 programme director, honourable minister of basic education, ms angie motshekga, deputy governors, heads of department, guest speaker, aisha pandor, colleagues from the south african reserve bank and the department of basic education, parents, representatives from schools, distinguished guests, ladies and gentlemen i am honoured to be standing here this afternoon as we pay tribute to some of the most outstanding economics learners in the country. the monetary policy committee ( mpc ) schools challenge was launched as a pilot programme in 2012 by the south african reserve bank ( sarb ) in conjunction with the gauteng department of basic education ( dbe ). the challenge is a competition for grade 12 economics learners, which exposes them to how the mpc sets the repurchase ( repo ) rate. it also aims to increase the level of interest in economics as a subject of choice among high school learners, and to encourage learners to pursue a career in economics. the sarb has since expanded the challenge to other provinces, as follows : in 2014, to limpopo province ; in 2015, to the free state province ; in 2016, to mpumalanga province ; and in 2017, to the eastern cape, north west and northern cape provinces. today is a major milestone in the history of the mpc schools challenge. this is the first time that schools from all nine provinces have participated in the challenge. in july 2017, the minister of basic education, ms angie motshekga and i launched the national roll - out of this challenge at a media conference here at the sarb where it was announced that the kwazulu - natal and western cape provinces would be participating in the challenge from 2018, effectively opening the challenge to schools in all nine provinces for the first time. the number of participating schools has since risen from 70 ( seventy ) in 2012 to 813 ( eight hundred and thirteen ) in 2018 – impacting 3 212 ( three thousand two hundred and twelve ) learners. the sarb believes the competition will raise the level of understanding of monetary policy, and contribute directly and indirectly to broad public economic education. the students who participate in the mpc schools challenge will also have a better understanding of the role of the sarb. at the onset, we must commend our school finalists ( in alphabetical order ) : empucu