File photo: Bongani Shilubane/African News Agency (ANA).
File photo: Bongani Shilubane/African News Agency (ANA).

LETTER: Nationalising reserve bank can be a blessing

By Morgan Phaahla Time of article published Jun 9, 2019

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Johannesburg - It is interesting that the inflation targeting debate has reared its ugly head in the public domain.

Those who stir up the debate undermine the ANC conference resolution at Nasrec. None of the factions disagree that the rand is one of the most traded currencies in the global market. Hence inflation targeting is good for the stability of the currency to stimulate growth.

This narrow function is derived from the mandate of the SA Reserve Bank which had been crafted with the assumption that employment is a direct outcome of growth.

Prior experience has proven the theory to be exceptionally flawed.

Since the adoption of the Growth, Employment and Redistribution macro-economic strategy in 1996, the economy produced growth with stable currency and low price inflation.

Many celebrated because it aided in the creation of the black middle class and bourgeoisie in debt stock, yet emasculated to build industries.

Nationalisation of the central bank can be a mixed blessing, but the devil is in the detail. The real advantages need to be analysed in their economic and political contexts, owing to the strategic rational. 

Morgan Phaahla - Boksburg

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