with the united kingdom and other members of the then sterling area, as part of the emergency finance regulations applied by that group of countries. the original objective was to retain a free movement of funds between these countries whilst preventing “ hard currency ” funds from flowing out of the area to non - sterling countries. whilst the sterling area exchange controls were removed gradually after the end of the second world war, liberalisation of controls in south africa was halted by the declaration of a state of emergency in march 1960, and the imposition by the authorities in may and june 1961 of comprehensive measures which were intended to strengthen both the current and the capital accounts of the balance of payments. as roger gidlow ( 1995 : 181 et seq ) states then, stricter import controls included restrictions on inheritance, gift and maintenance transfers as well as allowances for tourists and emigrants. even more significant, capital transfers abroad by residents were disallowed while residents were called upon to declare their foreign assets and liabilities. furthermore, the transfer of profits earned by foreign controlled companies prior to 31 december 1959 was prohibited. reviewing developments from the vantage point of 1996, the governor of the south african reserve bank ( sarb ) wrote as follows ( stals, 1996 - 06 - 17 ) : the initial non - economic factors that led to the outflows of capital from south africa during the more than thirty years, from 1961 until the early 1990 ’ s rapidly disappeared after the announcement of the election of the government of national unity towards the end of 1993. although a large amount of funds still flowed out of the country during the first half of 1994, the situation changed dramatically thereafter. in the second half of 1994, there was a net inflow of more than r9 billion into the country, and during the calendar year 1995 a further net inflow of r21, 7 billion, to bring the total net inflow for the 18 months from july 1994 to december 1995 to more than r30 billion. in april 1994, when the government of national unity took office, the reserve bank held about r7 billion in foreign reserves, but also had about r6 billion outstanding in short - term borrowings. during the years which ensued, the sarb followed a policy of trying to stabilise the exchange rate of the rand by intervening in the domestic foreign exchange market, this being consistent with the provisions of the interim constitution of the republic of south africa which required the bank to protect the internal and external value of the currency.

speeches thirdly, he also pointed out that in the united kingdom ( uk ), many borrowing costs, such as mortgage rates, reset after a couple of years. this would put a lag on monetary policy transmission, meaning the bank of england's monetary policy committee would be able to pause rates and still expect the effects of past monetary tightening to intensify in the economy. of course, different countries have different conditions. accordingly, it is not clear that matterhorn strategies are always better or worse than table mountain strategies. for example, there are several latin american central banks that have been praised for their proactive responses to the recent global inflation surge. their interest rate paths resemble the matterhorn much more than table mountain. in brazil, for instance, the policy rate went from 2 % in 2021 to a peak of 13. 75 % by august 2022. it has since fallen by 150 basis points to 12. 25 %. similarly, in chile the policy rate was just half a percent in 2021. it peaked at 11. 25 % by mid - 2022. it has so far fallen back by 225 basis points to 9 %. but these are countries with worse inflation experiences, historically. they also experienced very severe inflation surges, with double - digit price growth during 2022. you can make a strong argument that matterhorn strategies were appropriate in these contexts. south african conditions are different. our policy stance has so far looked much more like table mountain : we climbed from 3. 5 % to 8. 25 %, and policy rates have been unchanged at 8. 25 % since may this year. rates have clearly risen significantly, but much less than we saw in the latin american cases. relatedly, while we have seen cuts already in those countries, markets and analysts only anticipate shallow cuts in our repurchase ( repo ) rate, sometime around the second half of 2024. barring any upside surprises, this has the appearance of a table mountain path. is this the right strategy for south africa? firstly, it is important to note that we have not had the experience of the us or the uk where financial conditions have been slow to tighten. the south african private sector, especially households, mostly carries floating rate debt. when the sarb adjusts the repo rate, borrowing costs reset rapidly, typically within one month. 3 / 7 bis - central bankers'speeches we therefore see quick and clear monetary policy transmission, which carries over as expected to variables