TUESDAY, 9.30AM:
RADICAL reforms to the monetary system, allowing more flexible interest rates, have been proposed by the Reserve Bank.
In a discussion document, the Bank outlines a system whereby the repo rate — the currently fixed rate at which cash is provided to banks — fluctuates on a daily basis, and the demand and supply of cash becomes the most important factor in determining market yields.
Under the new system, to be introduced in March next year, market interest rates will respond quickly to inflows and ouflows of foreign exchange, and reflect more dramatically the strength or weakness of the rand.
If implemented, the changes will bring South Africa in line with most industrial countries.