There are a number of key roles that the South African Reserve Bank (SARB) plays in the South African banking industry these include: 

• Bank Supervision 

The Reserve Bank is responsible for bank regulation and supervision in South Africa. The purpose is to achieve a sound, efficient banking system in the interest of the depositors of banks and the economy as a whole. 

This function is performed by issuing banking licences to banking institutions, and monitoring their activities in terms of either the Banks Act (No. 94 of 1990), or the Mutual Banks Act (No. 124 of 1993) and the regulations relating thereto.   

• The issuer and destroyer of both banknotes and coins 

Since SARB is responsible for issuing both banknotes and coins. They’re also responsible for the wholesale distribution of banknotes and coin. Banks then distribute the banknotes and coins to their branch offices to ensure availability to the public. 

The SARB branches are responsible for ensuring the availability and an adequate supply of good quality notes to meet the public’s demand, and to replace soiled notes. The branches also settle claims for mutilated banknotes.  

The branches of the Bank, the South African Police Service and the commercial banks also work together to combat the counterfeiting of banknotes. 

• Banker of other Banks 

The Reserve Bank acts as custodian of the cash reserves that banks are legally required to hold as well as those they prefer to hold voluntarily with the Bank. The Bank has the authority to change the minimum cash reserves that banks are required to hold and can use such adjustments to influence bank liquidity and the amount of money in circulation. 

• Provision of Liquidity to Banks 

The Reserve Bank provides liquidity to banks during periods of temporary shortages of cash. This function is referred to as the Bank’s “lender-of-last-resort lending activities”. This function implies giving assistance to a bank facing liquidity problems. Such assistance is only given after a full analysis of the problems afflicting such a bank and the reasons they arose.  

And the main purpose of special assistance is therefore to protect depositors. The assistance will only be given on specific conditions, and its purpose is to prevent the bankruptcy of the bank receiving assistance, and/or avoid the danger of problems spreading to other banks through a “run on the bank”.’