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The IFP welcomes Pravin Gordhan's announcement that government has
finally decided to amend the law establishing the South African
Reserve Bank to bring the bank in line with the Constitution. However
the measures announced by the Minister are just a small step in the
wrong direction for the right reason.

For many years the IFP has pointed out how the Reserve Bank cannot be
at the same time privately owned and fulfill the constitutional
function of being an organ of State. We have also pointed out how the
operation, procedures and actions of the Reserve Bank are secretive
and not conducted in compliance with the laws regulating
administrative procedures.

The Reserve Bank must be brought within public control, either by
means of nationalisation or a capital increase which gives government
a 51% shareholding. Limiting the powers of shareholders, injecting on
the Board less than qualified people and departing from standard rules
of corporate governance is not a solution. In addition, the Reserve
Bank must be forced to operate under the Constitution.

More fundamentally, a revision on the legislation on the Reserve Bank
should prompt a more comprehensive reflection on the features and
purposes of our monetary system. Consideration should be given to move
away from a debt-based currency issued by the banking system to move
to debt-free currency issued by the State.

We invite the Minister to deal with the real and fundamental issues
avoiding quick-fix solutions and the temptation of using this as yet
another opportunity to create openings on the Board of the Reserve
Bank for political clients.