One hundred years of private shareholding in the South African Reserve Bank

Abstract

The South African Reserve Bank (SARB) is one of only nine central banks around the world with private shareholders. This paper contributes to the understanding of this ownership arrangement by outlining the history and evolution of private shareholding in the SARB since its inception in 1921 to the present day. It considers the reasons for shares having been issued to establish the SARB, and changes in legislation which influenced the SARB's ownership structure and the roles and responsibilities of the Board of Directors, shareholders and shareholder-elected directors. It also considers some earlier calls for the SARB to be nationalized. The historical overview shows that executive power has always rested with government appointees, while the government has gradually gained more controlrelative to private shareholdersover the Board. This paper also confirms thatwith respect to monetary policyownership of the SARB is purely notional. The SARB's policy goals and executive powers are derived directly from the government and the Constitution, and neither the shareholders nor the directors appointed by shareholders have a say in the SARB's mandate, its policy goals, or the conduct of monetary policy. The role of shareholders is limited to matters of corporate governance only.

Central Bank Independence, Inflation and Money Growth: Evidence from South Africa

“…In the South African context, there has been confusion over the role of the SARB's private shareholders, shareholders' role in appointing directors to the Board, and the role and influence of the Board over monetary policy (Vermeulen 2021). The SARB is wholly privately owned, with its 2 million shares held by around 800 shareholders.…”