generally one of those things that works best when most people don ’ t have to worry about it, like plumbing or electricity. nonetheless, interest rates play a crucial role in all modern economies9 ; monetary policy is an important driver of these rates ; and the process of policy transmission affects how these decisions reach into the economy, ultimately affecting all of us. i hope, therefore, it has been interesting and useful to you to reflect on our reforms in this area. thank you. jaime caruana. “ unconventional monetary policies in time of crisis ” suerf annual lecture. 16 november 2009. available at : https : / / www. bis. org / speeches / sp091118. htm philip turner. the new monetary policy resolution : advice and dissent. niesr occasional paper. no. lv. 2021. available at : https : / / www. niesr. ac. uk / wp - content / uploads / 2021 / 02 / new - monetary - policy - revolution. pdf a recent reiteration of this point is jamie dimon. “ chairman and ceo letter to shareholders ” jp morgan chase and co. annual report 2022. available at : https : / / reports. jpmorganchase. com / investorrelations / 2022 / ar - ceo - letters. htm “ interest rates are extraordinarily important — they are the cosmological constant, or the mathematical certainty, that affect all things economic. ”

form of money held exclusively in samos, the south african multiple option settlement system, which is the backbone of the national payments system. it is managed by the sarb. samos accounts are held mainly by banks, 28 currently, who transact directly with the reserve bank. they use these reserves to settle payments between each other. the total supply of bank reserves is around r220 billion, of which about r140 billion is required reserves. this is the form of money used to implement monetary policy. this r220 billion is only a fraction of the total amount of money in the economy. if you turn to our quarterly bulletin, where you will find comprehensive statistics on monetary aggregates or money supply, you will see that m3 – which is a broad measure of money, including all bank deposits and money market shares – was r4. 72 trillion at the end of 2022. the total supply of sarb money was therefore only about 8 % of total money in the economy. how is it that most money is not sarb money? why can anyone else can create money? isn ’ t that counterfeiting? in fact, money creation is a normal characteristic of a banking system. banks routinely create money through the process of making loans. it works in a very simple way. 2 a bank takes in a deposit and that deposit meets the definition of money – for example, this is the money you have in the bank. but then the bank makes a loan, for instance to someone who borrows for a car or a house. and that loan also appears as a deposit at a bank, which is also money. in this way, the act of credit creation expands the money supply. the constraint on banks is that every deposit is a promise to pay in bank reserves, which are the liabilities of the central bank. 3 banks have no power to create these and can instead only access them on terms worked out by the central bank, through its monetary policy implementation framework. this creates a powerful constraint on banks. whenever they create money, they are obliged to ensure these rands are always valued at par with bank reserves. this obligation is tested many times daily : every time a payment goes from one bank to another, this settlement is conducted through the samos system using bank reserves. so, if bank a creates money by extending a loan to a household, and that household then buys something from someone who banks with bank b, bank a will have to transfer bank reserves to