The South African Reserve Bank has proposed a methodology to assess systemically essential banks in South Africa. The South African Reserve Bank (SARB) has published, for public comment, a discussion paper titled ‘A methodology to determine which banks are systemically important within the South African context.’
The primary objective of the SARB is to protect the value of the currency in the interest of balanced and sustainable economic growth in South Africa. Also, the SARB’s mandate and function of protecting and enhancing financial stability in the Republic of South Africa are affirmed in the Financial Sector Regulation Act 9 of 2017 (FSR Act). In support of the SARB’s financial stability mandate, section 29 of the FSR Act provides the Governor of the SARB with the powers to designate an institution as a systemically important financial institution (SIFI) and affords the SARB additional powers about SIFIs to assist it in fulfilling its mandate.
The discussion paper focuses on the proposed methodology to determine which banks are SIFIs within the South African context. The method takes into account international guidance and best practice as well as the unique characteristics of the South African financial system.
Comments on the paper are invited to ensure that the methodology will accurately reflect the systemic importance of banks and serve as a sound basis for the Governor to designate those banks as SIFIs. A summary of the comments received may be published unless respondents explicitly request otherwise.