In remarks at the Annual Financial Markets Cocktail Engagement, South African Reserve Bank Deputy Governor Rashad Cassim outlined progress on the Financial Markets Department’s agenda, spanning enhancements to the monetary policy implementation framework (MPIF), reforms to support collateralised lending and repo markets, the market transition from the Johannesburg Interbank Average Rate (Jibar) to the South African Rand Overnight Index Average (ZARONIA), and developments in foreign exchange reserves. On MPIF implementation, Cassim reported that discussions with banks and non-bank financial institutions found the surplus system has strengthened policy transmission and reduced volatility in short-term rates, supported by reserve remuneration at the policy rate within a tiered floor design where balances above quotas earn a lower rate. He noted the system’s liquidity surplus has increased from about ZAR 45 billion to around ZAR 160 billion over three years and that the central bank is assessing longer-term limits to surplus absorption. On market collateralisation, he highlighted domestic legal, regulatory and infrastructure frictions, including constraints that limit money market funds’ ability to act as cash lenders and gaps in repo functionality and automation. The South African Reserve Bank and the Financial Markets Liaison Group are pursuing reforms including triparty collateral management, expanded repo functionality at the Johannesburg Stock Exchange, legal clarification of repos and potential regulatory changes to broaden participation. On reference rate reform, he pointed to faster ZARONIA adoption since the ZARONIA First initiative began in May 2025, citing London Clearing House data showing notional exposures in ZARONIA-linked instruments rising from ZAR 6.4 billion to ZAR 198 billion this year, while estimating remaining gross Jibar exposures at about ZAR 44.7 trillion, mostly derivatives, and flagging risks if legacy contracts are not transitioned in time. He also said foreign exchange reserves have grown by about USD 20 billion over the past decade to around USD 69 billion. For collateral reforms, a triparty collateral management proof of concept is scheduled to launch this month, followed by a position paper and market feedback, alongside continued engagement through established working groups and consultations.
South African Reserve Bank 2025-09-04
South African Reserve Bank deputy governor reports progress on MPIF surplus system, triparty collateral management roadmap and Jibar to ZARONIA transition
South African Reserve Bank Deputy Governor Rashad Cassim noted progress on the Financial Markets Department’s agenda, including monetary policy framework enhancements, repo market reforms, and the transition from Jibar to ZARONIA. The surplus system has improved policy transmission, with a significant liquidity surplus rise. Reforms are addressing legal and infrastructure frictions in market collateralisation. Cassim highlighted the rapid adoption of ZARONIA and foreign exchange reserves growing to USD 69 billion.