THIS DAY IN HIS­TORY

The New Age (KwaZulu-Natal) - - Comment - Sahis­tory.org.za www.

THE South African Re­serve Bank was es­tab­lished in terms of the Cur­rency and Bank­ing Act, 1920 (Act No. 31 of 1920) in Par­lia­ment. This came into be­ing af­ter a gold con­fer­ence in Oc­to­ber 1919.

Prior to its es­tab­lish­ment, South African com­mer­cial banks is­sued ban­knotes to the pub­lic. Th­ese banks had to con­vert the notes from the pub­lic into gold. Sub­se­quently the gold was sold to Lon­don. More­over, the gold had to be reim­ported into South Africa and then con­verted into ban­knotes again.

The com­mer­cial banks re­quested the gov­ern­ment to re­lease them from the obli­ga­tion to con­vert their ban­knotes into gold on de­mand. For this rea­son the gold con­fer­ence was con­vened to dis­cuss South Africa’s cur­rency.

In the course of the con­fer­ence a se­lect com­mit­tee of Par­lia­ment rec­om­mended the es­tab­lish­ment of a cen­tral bank to take over the gold held by com­mer­cial banks and the is­su­ing of ban­knotes.

The rec­om­men­da­tion was ac­cepted by Par­lia­ment. The South African Bank opened its doors for busi­ness on June 30, 1921. –

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