n African Review of Economics and Finance - Central banks and fractional reserve banking : money creation out of nothing?

Volume 7, Issue 2
  • ISSN : 2042-1478
  • E-ISSN: 2410-4906


The view is often held that central banks have little or no connection to the society within which they exist, although their policy decisions impact directly on people, institutions and society. While this view has gained much attention in the media and in some academic circles, this article uses evidence from South Africa to show the fallacy of the view that 'money is created out of nothing' and that central banks are owned by and secretly controlled for the benefit of particular interest groups. Instead, it draws on insights in post-Keynesianism to demonstrate that the ownership of the South African Reserve Bank rests in the hands of private shareholders, but in an open and transparent manner, and that the Reserve Bank succeeds in ensuring that the system is supervised and sufficiently regulated in the public interest.

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