Question

During this COVID‐19 pandemic, the South African Reserve Bank (SARB) plays a crucial role in maintaining financial stability.

Describe the roles that the SARB can play to ensure the objective of financial stability is met.

Marks will be awarded for the quality of your paraphrasing, i.e. you must write in your own words. (Note: 1 mark to identify the area and 2 marks to describe each of the areas)

The 4 areas are:

Formulation and implementation of monetary policy-

Service to government -

Provision of economic and statistical services -

Maintaining financial stability-

Answer 1

During the covid-19 pandemic, the South African reserve Bank plays an important role in the determination of the financial stability and they are as follows-

A. They are liable for maintenance of a proper monetary policy which will be controlling the money flow into the economy and they will be determining the interest rates along with doing open market operations and all such activities which will be helping in stabilizing the demand and monetary flow into the economy.

B. They are also liable for maintaining a support service to the government in order to provide various kinds of bailout packages in order to stabilize the economy and stimulate the demand.

C. They will also look up on maintaining the economic stability by cutting out the interest rates and infusing Liquidity into the economy and making businesses not fail at these times so that employment can be generated and there would not be a financial Chaos and they will be able to maintain a financial stability in the country.

D. They will also look for providing provision of economic and statistical services which will be impacting the overall demand and supply into the economy and operations of the businesses in the economy.