Stop Bank ownership debate

Reserve Bank governor Gill Marcus urged a halt yesterday to debate about the ownership of the Bank, calling those behind it greedy and the concept of liquidation "nuts".

She said proposals to pack the Bank's seven-member board with political appointees would "make it a very difficult working environment".

Briefing Parliament's finance committee yesterday, Marcus said the "false debate" about the status of the Bank should stop.

"This is something that is absolutely against the national interest, it is certainly against the interest of the central bank and in my view these people should not be allowed to get currency around it, as if this is real or doable. It is fundamentally against the principles, policies and objectives of the central bank," she said.


The SACP has argued that nationalising the Bank would dilute the influence of business on monetary policy and "reorient" the monetary policy committee, which sets the Bank's interest rate.

Cosatu said in a recent statement: "It is a dangerous anomaly that a body which should be protecting the public interest when it makes decisions on interest rates, which have a major impact on all South Africans, should be owned by a group of anonymous private shareholders."

Marcus dismissed the debate, saying it was creating an artificial market in the Bank's shares based on the belief that its owners would share its reserves of about R12-billion among themselves if it was restructured.

She said the price of Bank shares had jumped nearly a quarter to R12.50 on the debate and some owners were offering their holdings at R4600/share.

Marcus, who was a member of the SA Communist Party in her youth, dismissed calls from the SACP and Cosatu for the appointment of political representatives to the board of the Bank.

"Quite honestly, [the Bank] should have the most prestigious board with the best quality people on it that can guide you on all the issues and become a real resource to the organisation," she said.

"It is their fiduciary duty to act in the interests of the organisation, not in what is a possible outcome for me to do better out of this organisation."

Debate about the ownership of the Bank has arisen out of the row between unions and the government about it's tough stance on inflation, which resulted in interest rates some consider too high.

Finance Minister Pravin Gordhan responded last week to concerns that the Bank's focus on inflation was undermining growth and job-creation. He wrote to Marcus instructing her to continue to chase inflation of 3% to 6%, but urging her to take account of growth in deciding how to defend the currency.

Marcus said yesterday the letter had brought clarity and transparency, but insisted: "The job of the central bank is not employment creation.

"The role of the central bank is to cut inflation and what this is saying to you is that 'we don't expect you to act in an extreme manner, but to act in the best interests of the economy'," she said.

"There is no question that we are aware that the decisions that we take touch everybody's lives."

Source: Times Live