Transition in decision-making in the South African Reserve Bank: an area of interest to Vishnu Padayachee (1952–2021)

The SA Reserve Bank (SARB) was established in terms of the Currency and Banking Act of 1920 and opened its doors for business for the first time on June 30, 1921. The SARB had limited committee decision-making and a high degree of individual responsibility for many years after its establishment. This approach started changing in the 1980s. Currently the SARB is characterised by extensive management-by-committee. This includes monetary policy decisions; in this instance a change for the better. The current monetary policy decision-making structure results not only in improved transparency, but also a better understanding of the role of monetary policy and the impact of monetary policy decisions. The improved monetary policy decision-making structure was ushered in at the time of the adoption of inflation targeting as a monetary policy framework for South Africa and successfully focuses attention on this mandate of the SARB.

This paper is a precursor to more research on the neglected topic of the institutional structures of central banks. There is an extensive body of research literature on the implementation of monetary policy and the link to inflation and general economic conditions, covering and comparing many countries. To the contrary, very little research has been published on the institutional structures of central banks. This paper is a first step in a journey to fill this void in the research literature.