Answer to Question #202117 in Economics for Sara

Question

In a recent article on BusinessLive, Duma Gqubule argues that South Africa does not have a real central bank. He criticises the conduct of monetary policy and puts forward a range of proposals under the umbrella term monetary finance. 

Compare his proposals to what you have learned about monetary policy in Chapter 9. You can compile a summary table as follows.

Answer 1

SA needs a developmental central bank, with a dual mandate that combines price stability and employment. It has to expand its policy toolkit to achieve developmental objectives. The wide spectrum of possible policy tools includes monetary finance, central bank lending and quantitative easing (QE).