Hon Speaker, hon members, ladies and gentlemen, given the difficulties that the Reserve Bank has been experiencing in the past, as evidenced by the recent public debate regarding the changes being proposed by this Bill, amendments to clarify the different roles of shareholders, the executive and Parliament are welcomed.
In the main, the role of the shareholders in the context of the Reserve Bank is to safeguard its independence as stipulated in the Constitution of the Republic and to ensure that it fulfils its mandate as set out in the South African Reserve Bank Act. Collectively, the role of the shareholders must be seen as that of the board of directors as a whole. Clauses seven and eight strengthen the public character of the SA Reserve Bank. They will assist in building the credibility of the bank. Shareholders have to act in the interest of the bank and the public.
The Bill identifies roles of the board in terms of its responsibilities, powers and duties. These include corporate governance matters, such as compliance, rules adoption and policy determination, approving the budget, reports, appointment of bank secretaries and assistants, remuneration policy, allocations of funds to the retirement fund, authorising the establishment of branches, making recommendations to the Ministers and performing any function assigned to it in terms of the Act.
Most of the problems affecting public institutions are as a result of unclear mandates between the various stakeholders such as the board of directors, executive management and government. The Bill clearly defines the role of the board as that of governance, authorising and reporting. It provides for clear demarcation of responsibility between the board and operational management, vested with the governor and the deputies. These functions are consistent with best practice and principles of good governance internationally as far as central banks are concerned.
Directors must be fit and proper to act in the interest of the SA Reserve Bank and not of shareholders. The establishment of a panel and its proposed composition is viewed as the most appropriate mechanism to ensure nominees are fit and proper, as the SA Reserve Bank plays a vital role in the South African economy. The amendments of sector allocations are intended to ensure that the board has persons with knowledge of relevant sectors. Presidential appointees will contribute to this knowledge.
The role of the executive management, on the other hand, is a dedicated one from the Governor and the Deputy Governors. Their role is that of implementing policy and management. They do not take decisions that are of governance nature. They account to the board, who in turn accounts to Parliament. Parliament's role is critical in the sense that the bank is also independent of the executive arm of the state. Its role is to seek accountability from the bank through its board of directors. Parliament is entitled to summon the bank to account at any point in time, should it be necessary to do so. I thank you. [Applause.]