Call for sanity over Reserve Bank ‘attack’

INFLUENTIAL academics and economists have written an open letter, calling for a halt to attacks on the Reserve Bank and asked that debates on its mandate be conducted by experts in the open.

Altogether 76 academics and economists – among them Neva Makgetla, Lumkile Mondi and Steven Friedman – said public protector Busisiwe Mkhwebane’s remedial action for the bank’s apartheid-era lifeboat to Bankorp was “startling”.

Mkhwebane has directed parliament to amend the Reserve Bank’s constitutional mandate to focus on the socioeconomic wellbeing of citizens, from its current one of protecting the value of the currency in the interests of balanced and sustainable economic growth, a move that the Reserve Bank has taken on judicial review.

“In no case that we are aware of is a central bank’s mandate spared the responsibility of price stability . . .

“To exclude price stability from a central bank’s objective in favour of some poorly conceived reference to ‘socioeconomic well-being’ is incomprehensible and plainly irresponsible,” they said.

It raised questions about what mandate was appropriate for a central bank in an emerging economy such as South Africa, which was a complex debate, they said.

“Some academics and economists will be pleased with the exclusive price stability mandate of the Reserve Bank.

“Others will argue for a broader mandate, including growth and employment, alongside price stability.”

The bank had not responded to questions regarding the open letter at the time of publication. — BDLive