Ministers of the Cabinet;
Governors and other representatives of the central banks of the member countries of the SADC;
Ladies and gentlemen.
It is my honour today to propose a toast to an institution which has made a major contribution to the financial and other economic developments in our country.
As a person at my age should know, a 75th birthday entails a lot of reflection on the happy and sad moments of life;moments which, in combination, amount to invaluable experience.
The South African Reserve Bank operates in an environment in which the margin of error, if there is any at all, is limited indeed. And we are proud that the experience you have gathered over these decades stands the Bank and our entire economy in good stead.
When we received your invitation in March, the difficulties facing the Rand had just started to unfold. And by the time we accepted it in May, the situation had worsened. After that, there was the turbulence occasioned by the decision of major commercial banks to increase their interest rates.
And so, as each event unfolded, we had to agonise about what to say this evening.
The volatility and mood swings of the financial markets are a burden that all countries have to carry. We have had our own share of rude shocks in the past few months. And thanks to the Finance Ministry and the Reserve Bank, we have, under the circumstances, passed the test with flying colours.
The stability that has set in and the ensuing decision taken by the major banks to reduce rates not only made my life easier. It will also impact on the material lives of all citizens. It will add impetus to our efforts to ensure rapid economic growth and the creation of much-needed jobs.
Scanning through the history of the South African Reserve Bank, one comes across many challenges that you had to contend with.
The path to the establishment of the Bank was itself a thorny one. There were arguments that South Africa's well-functioning banking system served the country well, and therefore that a central bank was not necessary. Others argued, quite correctly, that the prevailing banking system was, in the words of then Minister of Finance, Mr. Burton, like a person "without a head".
Today, greying with wisdom, that head is there;and we have assembled to celebrate the contribution that you have made to the country's financial and monetary development.
When the Reserve Bank was founded, a deliberate decision was taken to ensure that the country's financial system would be less dependent on London. Thus was born the gradual process whereby South Africans would determine their own economic imperatives. Exclusive as it was then, the Reserve Bank reflected the political milieu in which it had to operate. Today, the nation as a whole has redeemed itself as master of its own destiny.
The Reserve Bank was established long before the founding of central banks in most countries. It was in fact only the fourth central bank set up outside Europe, the others were located in the United States of America, Java and Japan.
It is natural that a Bank with such a history should occupy such a place of honour in international financial circles. It is natural too that our financial and banking infrastructure should be cited as a major boon in our attractiveness as an investment destination. These are attributes that we should be proud of;qualities we should nurture;and virtues we should promote.
Yet we need to remind ourselves each time we are tempted to beat our chest with pride, that such sectors where we are in the league of the best in the world, face the urgent and mammoth challenge of lifting the rest of the economy and society to new heights. Our celebration today is an injunction to all of us - in government and in the private sector - to perform even better.
The credibility that our Reserve Bank has won in international circles is in part a reflection of the quality of its staff, close on to 1 800 of them, providing international, national and regional services throughout the country.
Needless to say, from the exclusive beginnings of 75 years ago, one of the greatest challenges that the Bank today is to ensure that tis staff complement, at all levels, reflects the diversity of our country. This is our major strength as a nation. And there is excellence in diversity.
It is encouraging to note that deliberate steps have been taken in this direction. and we are confident that more will be done.
In many of my visits abroad, I have been inundated with praises for this wunderkind of the South African financial system;and I regret to say this in your presence, Mr. Governor. So I made it my duty to find out where you come from, and the qualifications that have earned you such respect. I was pleasantly shocked to note that, with your excellent performance in acquiring your doctorate and other qualifications, you joined the Bank before you completed your commerce degree;and you rose through the ranks at the same time as you upgraded your skills.
Herein lies a profound lesson for young South Africans. For the moral of your own achievements is that, with application, determination and discipline, we can all rise to positions of responsibility. Today the doors of learning are wide open, and young South Africans from all communities should take up the challenge.
As they do this, they should find in the Reserve Bank a transformed and transforming institution. They should see in the Bank an institution with the necessary profile to become the first port of call for top-class graduates and other young men and women - particularly from communities that have all along been excluded - who are prepared to learn and to excel in the service of society.
During its 75 years, the Reserve Bank from time to time found itself in the forefront of many serious financial challenges deriving from local and international developments.
At the political level, the Second World War and common measures that Sterling Area countries had to undertake imposed certain obligations on the Bank and the country. But no other factor made the Bank's work more difficult than the intensification of the apartheid system, and the resistance, culminating in the outflow of capital and the debt standstill in the 1980s.
If the South African nation can today celebrate its liberation, no less unshackled is the Reserve Bank, now able to relate to counterparts in Southern Africa and the continent, as well as further afield, not by stealth nor as a pariah;but as an equal and proud financial and monetary representative of a free people.
The presence tonight of Governors and other representatives from central banks of the SADC bears testimony to this growing relation- ship, in essence the coming of age of our own Bank. We welcome them with all humility.
As they should know, we South Africans are wont at times to emphasise the role that we can play in assisting our neighbours in many areas of expertise. Yet, it is in such interaction with them and other partners that we also come to appreciate how much we can learn from their experiences in transformation, in building legitimacy, in serving society as a whole.
The 75 years of the South African Reserve Bank's existence were also marked by many technical challenges such as the abolition of the international gold bullion standard and the termination of the fixed price for gold, which culminated in the collapse of the Bretton-Woods system some 25 years ago. The capacity of the Bank to adapt to these changing circumstances was confirmed over and over again.
Today, the new international financial system - some call it a "non-system" - of floating exchange rates and integrated global financial markets demands of central banks and governments the kind of dexterity that would test even nerves of steel.
Without entering complex international economic debates, perhaps one of the major challenges of today is to deepen discourse, in as dispassionate a manner as possible, around the current international financial system and its implications for growth, jobs and income distribution both in the developed and developing countries. We are certain that our own Bank can make an important contribution to such discussion.
We say so because, during its life-time, the Reserve Bank has contributed in many ways to the development of the financial infrastructure of South Africa, in a changing world environment, and contributed its share to the pool of international financial wisdom.
Its contribution to the development of our money and capital markets, the system of bank supervision and the active bond market which has afforded government a cost-effective way of raising funds needed for the Budget, is acknowledged far and wide.
The role of the Reserve Bank as the institution responsible for promoting financial stability in South Africa remains of the utmost importance. This is not only a matter of conviction on the part of Government;but it is explicitly entrenched in the constitution: the Bank is charged with the task of protecting the value of the currency in the interest of balanced and sustainable growth;and it is given autonomy over the instruments it uses in order to achieve that objective.
I suppose that nothing makes the life of central bank easier than the existence of a government policy framework within which it can operate, a macroeconomic strategy through which a combination of instruments can be used to pursue growth and equitable income distribution. Thus, the fiscal and monetary authorities can work in tandem, without placing undue pressure on one instrument.
The Macroeconomic Strategy released by government a few weeks ago seeks to do just this;and it spells out the interplay of deficit reduction and management of the money market.
Lest we lose ourselves in technical matters, the fundamental aim of all this is to create more jobs, and to provide better living standards for all citizens. This demanding task will not be possible in an environment of unstable financial conditions. Investors, be they foreigners or South African residents, cannot take rational decisions unless the value of the currency remains relatively stable. The government lends the Reserve Bank our full support in their efforts to achieve financial stability.
We know that the decisions of the Reserve Bank are not always popular with everyone, especially if they derive from developments outside of its control. The government, however, has full confidence in the integrity and the professionalism of the South African Reserve Bank to execute its difficult task, at the same time as it transforms itself under the new conditions.
For over 70 years, many men and women served the Bank and the economy as Board members, governors, deputy-governors and staff. Today, you are able to do so with the confidence and in the full knowledge that the whole nation supports your efforts.
You can rest assured that, as you improve the institution and change popular mind-sets, the whole nation will come around to see in your professionals, not merely erudite economists juggling numbers;but public servants pursuing the best interests of the country and its citizens.
Many happy returns!
Ladies and gentlemen;
I now ask you to rise, to lift your glasses and to share with me in this toast to the South African Reserve Bank.
Issued by: Office of the President