THIS DAY IN HISTORY
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. –