Econ Essay: Central Bank Function

Issues notes and Coins

• sole distributor of money

• if distribution was not centralised, money would not be generally accepted

Banker’s Bank

• all commercial banks keep their deposits with SARB

• SARB Supervises other banks

banker of the government

• government keeps their accounts with SARB

• SARB offers financial advise to the government

• SARB provides same service to government that commercial banks offer to consumers

Custodian of gold and foreign reserves

• south African gold reserves are kept in a vault in SARB

• foreign reserves are kept with SARB

Lender of last resort

• commercial banks can always rely on SARB to lend them money when their funds are exhausted

• the interest rate of this loan is called the repo rate

Credit Control

• SARB controls the money supply in the country

• over-production of money will result in the value of the rand decreasing

• policy to control the money supply in the country is called monetary

Economic Statistics and information

• SARB provides information and statistics about the south african economy

• all information is posted on the quarterly bulletin