South African Reserve Bank Governor calls for smarter regulation and reports limited aggregate impact from Basel III

The South African Reserve Bank published a keynote address by Governor Lesetja Kganyago arguing that the current risk environment calls for stronger and more effective regulation rather than deregulation, while urging regulators to refine how risks are assessed and supervised. Kganyago linked the post-2007–09 reform agenda to Basel III’s higher-quality capital requirements and noted South Africa’s rigorous implementation, including extensive consultation. He pointed to South African research initiated through a 2024 call for proposals indicating an insignificant negative impact on aggregate economic activity from Basel III, with more pronounced effects for some smaller, less capitalised banks and certain borrowers. The address highlighted risk drivers that, in his view, have intensified, including elevated global debt and policy uncertainty, crypto assets and decentralised finance creating money laundering and terrorist financing challenges and potential bubbles, technology and artificial intelligence increasing operational and systemic complexity, climate change with sizeable physical and transition risks, and the growing role of non-bank financial institutions with liquidity mismatches and leverage. He also referenced South Africa’s Financial Action Task Force greylisting as underscoring gaps in the regulatory framework and noted that the South African Reserve Bank has already issued guidance notes for banks and insurers on climate-related disclosure, governance and risk management, while flagging material data gaps.