coin in circulation. the central bank has to ensure that banknotes and coin remain a secure method of payment, unit of account, and store of wealth. a banknote is but a piece of paper, a coin but a piece of metal. both derive their worth from the trust that the citizens of a country have in the country ’ s currency. south african banknotes and coin are among the most secure internationally. over the past five years, the number of counterfeited south african banknotes has continued to decline. the security features embedded in our banknotes and coin represent the most innovative advances in global design and technology. it is important that south africans know these security features of our banknotes, and the sarb is making a special effort to educate the public in this regard. please take note of our ‘ look, feel, tilt ’ approach to checking for the security features and verifying the authenticity of your money. page 2 of 4 today, the sarb is also launching a mobile application as a platform to create greater public awareness of the security, technical and design features of our banknotes. the app features interesting details on the life and times of tata madiba – aligned to the commemorative banknotes. the confidence that south africans have in their banknotes and coin is based on trust that the banknotes and coin are authentic – and trust in the institution that issues them. therefore, the sarb must, without fear or favour, ensure that the buying power of the currency is protected. we therefore strive to ensure that the public trust in our banknotes and coin, as well as in the sarb, as the institution that issues them, is maintained. preserving the value of our money contributes to stronger economic growth and employment creation over time. furthermore, a low and stable inflation rate protects the purchasing power of all south africans and contributes to a lower cost of living. south africans should be proud that, despite all the challenges that we face as a country, we do not live in an economy with very high inflation. imagine having to cart your cash in a wheelbarrow to buy a loaf of bread, or the effort it would take to withdraw that much cash from an atm. as i have mentioned in the past : the history of money globally shows that when inflation walks through the door, public trust in the currency jumps out of the window. banknotes and coin become nothing but worthless pieces of paper and metal. our banknotes, however, are representative of an economy with sound fundamental

outside of the purview of regulatory agencies. responding to these developments is a fine balancing act. while continuing to focus on their monetary policy and financial stability mandates, central banks also need to respond to market developments that can potentially introduce risk into the broader financial system. in a quest to embrace innovation in the fintech space, the sarb is working on several collaborative efforts under the auspices of the intergovernmental fintech working group ( ifwg ). initiatives include participation in exploratory work on ‘ open finance ’, collaboration with innovators in the ‘ regulatory sandbox ’, and work on multiple central bank digital currencies ( cbdcs ) for international settlement through project dunbar. the sarb is also committed to bringing crypto - assets into the regulatory ambit given the growth and proliferation of these assets and the resulting risks they pose in the page - 9 - of 13 form of illicit financial flows, among others. in june 2021 the ifwg released a position paper on the need to regulate crypto assets in a phased and structure manner. as a member of the financial stability board, we have been participating in discussions for the need to coordinate these efforts globally. in april 2022, the project khokha 2 ( pk2 ) report was released - the culmination of work involving experimentation with distributed ledger technology ( dlt ). it explores the impact of tokenisation of financial assets through the issuance of a sarb debenture – or debt security - on dlt, and highlights a number of legal, regulatory and policy implications when applying this technology in financial markets. climate change climate change has emerged as a key threat to economic and financial stability and a lived reality for millions of people, domestically and globally. the floods that wreaked havoc in kwazulu - natal in january of this year and again in april represent a tiny fraction of the climate - related destruction visited on the global economy in the year under review. 2 greater rainfall in the eastern parts of south africa and less in the west are clear developments that our economy will need to adjust to. catastrophic weather events occur more frequently, and with greater damage. important projects on climate change are taking place within the sarb. these projects are being implemented through various policy and support areas. the economic research department is assessing the implications of climate related shocks for monetary policy execution and implementation. climate change and the transition to a greener economy have the potential to generate larger, longer and often more