. we can only hope that the recovery process will not encourage complacency with regard to the significant amount of repair work that still needs to be done, because the idea is not simply to return to where we came from, but to effect changes that will ensure that next time we will be at least better prepared and be in a position to limit the damage and its costs. difficult as the process is, the work under way in different fora pertaining to the reform of the international financial architecture and enhancing regulatory and supervisory standards needs to continue, and we cannot afford to lose the sense of urgency. 3. inflation targeting in south africa during the global crisis, south africa was in the fortunate position, where it did not have to consider responding to the economic slowdown with unconventional monetary policy. however, before i look at more recent monetary policy developments in south africa, i thought that it may be useful to touch briefly on the bank ’ s mandate. as is the case in many parts of the world, the role and responsibilities of the south african central bank and the appropriate focus of its work has come into much sharper focus. section 224 ( 1 ) of the south african constitution, from which the bank gets its mandate, describes the primary objective of the south african reserve bank as being “ to protect the value of the currency in the interest of balanced and sustainable economic growth in the republic ”. therefore price stability is core to the mandate of the bank. however, it is clear that price stability is not an end in itself, but in the interest of balanced and sustainable growth. it follows then that, as far as the constitutional mandate is concerned, both economic growth and by implication employment, need to be taken into account when making decisions on monetary policy. to give effect to these constitutional imperatives, the bank has been mandated by government to maintain low inflation within an inflation targeting framework. this framework is a means to achieve the objective. it is not an end in itself. we note the current debates around the appropriateness of our mandate and questions about how that mandate is executed. the sarb has indicated its willingness to openly engage various stakeholders to both explain its approach and to explore with them any ideas they may bring forward. governor marcus has identified improved communication and stakeholder engagement as a priority, and has underlined this by creating dedicated capacity in her office for stakeholder engagement and outreach. inflation - targeting was introduced by several countries in the 1990s under relatively benign conditions with generally favourable outcomes. the financial

daniel mminele : a perspective on south african monetary policy address by mr daniel mminele, deputy governor of the south african reserve bank, at the rand merchant bank fixed income seminar, cape town, 28 january 2010. * 1. * * introduction good afternoon ladies and gentlemen. thank you to rand merchant bank for the invitation to participate in this fixed income seminar. the global crisis has certainly changed the way many people think about things and has changed the manner in which the world operates. it has also taught us that a lot of people actually know far less about how the economy works than they would like others to believe, the implication being that it is particularly when things are going well that we should be asking ourselves “ why ”, and not assuring ourselves that it has been good judgement only 1. since the emergence of the global financial and economic crisis, the interest in the role of central banks and their work has risen to an unprecedented level. as you are aware that interest has also been accompanied by a much higher level of scrutiny. south africa has not been an exception and indeed the debate is continuing. my speech today will initially briefly touch on recent monetary policy responses to the global crisis. i will then provide a perspective on the mandate of the south african reserve bank, our monetary policy framework and its implementation in recent times, and conclude by making some remarks on the exchange rate within that context, as this is a topic which has also received much attention recently. 2. monetary policy responses to the global crisis the global financial crisis that started in 2007 and the ensuing deterioration in world economic growth necessitated drastic adjustments to fiscal and monetary policy in developed and emerging market economies in order to support economies and to ease credit market conditions. the origins of the crisis, its widespread nature and the extent of the financial market turbulence and the spill - over effects to other sectors of the economy prompted central banks to review their monetary policy implementation frameworks and to implement policies that, only a few years back, were not on their radar screens, and certainly outside the “ comfort zone ” of many. central banks responded with both conventional and unconventional monetary policies to the global financial crisis. during the early stages of the crisis, central banks adjusted their normal refinancing facilities, for example, they lengthened the maturity of their money market operations and extended the universe of securities they were prepared to accept as collateral for borrowing from the central bank. during this period several initiatives were announced by central banks acting both individually and in concert ( e