funding. in theory, international contagion could also be transmitted through the international exposures of the south african financial system. in the event, however, this has not materialised as the financial sector had very little direct exposure to the us sub - prime market. moreover, as has been indicated earlier, the banking sector in south africa has capital in excess of the regulatory requirement, operates within a regulatory environment which is fully compliant with the basel ii regulatory framework : and is subject to robust supervision by the registrar. 3. regional economic arrangements as is well known, south africa is a member of three regional organisations in the southern africa region, these being the common monetary area ( cma ) ( with lesotho, namibia and swaziland ) ; the southern african customs union ( sacu ), with botswana and the cma countries ; and the southern africa development community, sadc, whose members include all sacu members as well as angola, democratic republic of congo, madagascar, malawi, mauritius, mocambique, tanzania, zambia and zimbabwe. the cma, at present, allows each member to have its own currency, these being pegged one - to - one to the south african rand which circulates as legal tender throughout the area. each member state, except south africa, is required to maintain foreign reserves equivalent in value to the total amount of local currency issued. the reciprocal obligation of south africa is then to pay seignorage to the other countries in proportion to the rand circulating within their respective regions. for consistency, moreover, exchange controls are harmonised throughout the region. most of the major south african banks have a presence in each of the member countries of the cma as indicated in table 3 : but, as of now, none of the home - grown banks in lesotho, namibia, and swaziland have yet established a presence in south africa. regarding sacu, it is the case that negotiations leading to the current arrangement and reserve - sharing formula were finalised in 2002 ; ratified in a formal treaty in 2004 and the provisions were first implemented in 2005. revenue, deriving in essence from the implementation of a common external import tariff structure for the union and from excise taxes collected, is apportioned among the member states in accordance with a formula which has three components : namely, a customs component, an excise component and a development component. during the three years of operation, south africa ’ s contribution to the sacu revenue pool has amounted

department * advances in respect of which a bank raised a specific impairment impairment table table 2 : 2 : distribution distribution of of total total banking banking sector sector assets assets – – may may 2008 r bn % standard bank 721. 8 25. 2 absa 638. 9 22. 3 firstrand 552. 9 19. 3 nedbank 476. 9 16. 7 investec 165. 5 5. 8 other 304. 5 10. 7 2, 860. 5 100. 0 total banks source : bank supervision department table table 3 : 3 : south south african african bank bank presence presence in in cma and sacu countries march cma and sacu countries - march 2008 bank standard bank absa firstrand nedbank as % of bank assets as % of bank assets as % of bank assets as % of bank assets botswana1 0, 99 - 6, 8 - lesotho2 0, 42 - 0, 09 0, 35 namibia2 1, 56 - 2, 0 1, 07 swaziland2 0, 36 - 0, 18 0, 26 country source : bank supervision department 1 - southern african customs union ( sacu ) 2 - southern african customs union ( sacu ) and common monetary area ( cma ) table table 4 : 4 : macroeconomic macroeconomic convergence convergence targets targets year inflation ( % p. a. ) < 10 < 5 < 3 deficit1 / gdp ( % ) < 5 < 3 < 3 debt / gdp ( % ) < 60 < 60 < 60 < 9 < 9 < 3 indicator current account2 / gdp ( % ) notes : 1. deficit means the public sector deficit 2. external current account, excluding official transfers source : sadc secretariat july 2008 table table 5 : 5 : other other macroeconomic macroeconomic targets targets year economic growth ( % p. a. ) external reserves ( month of imports ) > 6 > 6 central bank credit to government ( % of tax revenue ) domestic saving / gdp ( % ) domestic investment / gdp ( % ) indicator source : sadc secretariat july 2008 references : bank for international settlements ( 2008 ) 78th annual report. bruwer, a. j. ( 1957 ) south africa : a case for a national gold and banking policy, cape town, h. a. v. m. south african reserve bank ( various years ), financial stability review south african reserve bank ( various years ), quarterly bulletin