providing more flexibility than other policy frameworks – a point lost on most critics of it – when implemented also featured a high and wide inflation target. relative to most peers, this proved to be too flexible, too high and too wide. the result was a tripling of the price level since 2000, the year we adopted inflation targeting. this hardly qualifies as an inflexible obsession with price stability, nor a framework inappropriate to our growth ambitions. as for fiscal policy, debt was reduced and there was even a small fiscal surplus in 2006. but again, steering clear of a debt crisis, and later running a fiscal surplus during the biggest boom in modern history, seem like acts of sanity rather than ideological excesses. we should also recognise that this period saw significant increases in social spending. total transfers to households rose from about 11 % of total spending to 15 % during the 2000s, and social benefits increased from under 10 % of total spending to 13 %. 11 if we discard the ideological viewpoint, and look back at this reform period objectively, how should we assess it? at the time, there was a sense that we had done many good things, but with underwhelming results. in one of the international growth advisory panel papers we commissioned back in 2008, for instance, dani rodrik wrote that, these figures are drawn from national treasury, ‘ table 5 : consolidated funds expenditure ’. these items grew through the 2000s and were stable in the 2010s. transfers to households were 10. 9 % of total spending in 2000 / 01 ; 15. 2 % of spending in 2009 / 10, and 15. 6 % in 2019 / 20. social benefits were 9. 4 %, 13. 1 % and 14 % of total spending for those same three fiscal years, respectively. economic policy has been conducted in an … exemplary manner, with south africa turning itself into one of the emerging markets with the lowest risk spreads … if the world were fair, political restraint and economic rectitude of this magnitude would have produced a booming south african economy operating at or near full employment. unfortunately, it has not turned out that way. 12 with the perspective of another decade, maybe that disappointment was overdone. certainly, higher growth was desirable. but at least we were growing fast enough to raise living standards. we were creating jobs. the glass was at least half full. the main reason we did not get higher growth was probably the failure to match the macroeconomic progress with

unlikely to fall apart. there were, of course, dissenting voices, notably at the bank for international settlements, who argued that central banks should not have a narrow focus on inflation only and should rather lean against this excessive leverage with higher interest rates, focusing on the financial cycle, which is usually longer than the business cycle. this would have implied higher interest rates than those prevailing before the crisis, despite the low inflation environment. history shows that these dissenting voices were correct ; current conventional wisdom prescribes that financial stability should be an explicit focus of central bank policy. there are disagreements, however, about where this responsibility should lie and what instruments should be used. some argue that it should be part of monetary policy and that interest rate settings should take the financial cycle into consideration. others argue that monetary policy should remain focused on inflation and that the task of financial stability should be given to a separate committee, although it is not self - evident whether this separate committee should bis central bankers ’ speeches be housed within the central bank or outside the central bank in a separate institution, as is the case in sweden. in south africa, we have adopted a position similar to that of the bank of england, where the responsibility for financial stability is given to the central bank overseen by a financial stability committee. this committee considers the stability of the financial system more broadly, rather than regulating and supervising individual banks. the latter remains the job of the bank supervision department at the south african reserve bank, which is transforming into a prudential authority in terms of the financial sector regulation bill ( fsr bill ) currently before parliament. the promulgation of the fsr bill will make the bank ’ s responsibility for financial stability explicit. the bill sets the provisions that will give effect to the bank ’ s financial stability mandate. the bank will be responsible for protecting and enhancing financial stability, and for maintaining or restoring financial stability if a systemic event has occurred or is imminent. in monitoring the strengths and weaknesses of the financial system, as well as any risks to financial stability, the bank will be expected to advise the financial sector regulators and other agencies of the steps required to mitigate risks to financial stability. the fsr bill also requires the bank to publish its assessment of the stability of the financial system at least every six months in the financial stability review, which is to be submitted to the minister of finance and the financial stability oversight committee. once the fsr bill is promulgated, the prudential authority will regulate individual