Deputy Reserve Bank governor Kuben Naidoo says that while SA is taking steps to open up its financial markets, there are good reasons to retain some prudential limits on capital leaving the country.
This comes after the recent debacle around exchange controls due to the Bank circular issued after finance minister Tito Mboweni’s medium-term budget policy statement (MTBPS) in October, which reclassified inward-listed instruments, such as exchange-traded funds (ETFs) as domestic assets, provided they were listed locally and rand-denominated.
That sparked a firestorm on social media with Sygnia CEO Magda Wierzycka arguing that the note meant investors could invest all their assets offshore via rand-denominated, locally listed ETFs.
The Bank later withdrew the circular, acknowledging that it could be open to misinterpretation as well as unintended consequences.
Wierzycka accused larger rivals of having lobbied against the new rules.
Naidoo, however, writing in Business Day, said it is “only correct that regulators require retirement funds and insurance companies to keep the bulk of their funds in SA since the bulk of their liabilities are here”.
Naidoo said the initial circular had unintentionally created loopholes contrary to long-standing policy. In future, policymakers would extend the public comments process to avoid confusion.
“However,” he said, “we do expect better from regulated entities when they raise their concerns or criticisms; that they do not undermine the regulatory process and regulators. Twitter is not a forum for complex public policy debate.”
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