The Nationalisation of the South African Reserve Bank: a Legal-Historical Perspective of Three Central Banks

Abstract

The debate continues about whether the South African Reserve Bank should be nationalised or not. This contribution looks at the evolution of central banks, as well as at the origin and historical background of the central banks in three countries, namely the South African Reserve Bank, the Reserve Bank of Australia and De Nederlandsche Bank. The shares in the South African Reserve Bank belong to private shareholders; the Reserve Bank of Australia has been the property of the government of Australia since its inception; and De Nederlandsche Bank was nationalised in 1948. The potential nationalisation of the South African Reserve Bank will come with a hefty price tag, as the shareholders will have to be compensated for the value of their shares. Section 224 of the Constitution of the Republic of South Africa, 1996 determines that the South African Reserve Bank should “protect the value of the currency in the interest of balanced and sustainable economic growth”. The constitutional power of the Bank to be responsible for monetary policy will not change if it is nationalised. This contribution recommends that the South African Reserve Bank not be nationalised due to the big cost thereof to South Africa and because not much will be achieved by such a step.