Kuben Naidoo on what the SARB is doing to cushion banks from COVID-19

In response to the economic challenges posed by the COVID-19 pandemic and Moody's downgrade, the South African Reserve Bank (SARB) has implemented a series of unprecedented measures to support the country's banks and financial system. These measures aim to stabilize the bond markets and provide much-needed relief to banks and businesses facing financial strain. The SARB's Deputy Governor, Kuben Naidoo, outlined the key initiatives taken by the central bank in a recent interview with CNBC Africa. One of the key interventions introduced by the SARB is the purchase of bonds in the secondary market and the relaxation of accounting and capital rules for banks. This move is expected to release approximately 300 billion rand for lending, providing critical support to the economy during these challenging times. Naidoo emphasized the importance of these measures in helping banks navigate the current crisis and continue extending credit to households and businesses. Additionally, the SARB has provided temporary relief to banks by waiving additional capital charges for customers experiencing temporary income loss due to the pandemic. This relief is aimed at supporting individuals and businesses facing financial hardship during this period. Furthermore, the central bank has reduced the capital and liquidity requirements for banks, freeing up additional resources for lending and stimulating economic activity. Despite these measures, some economists have called for the SARB to implement quantitative easing to further support the economy. Naidoo acknowledged the ongoing discussions within the central bank and stated that future actions would depend on the evolving economic situation. The SARB is closely monitoring market dynamics and stands ready to take additional steps if necessary to ensure financial stability and support credit flow. While the SARB has already implemented several supportive measures, the central bank remains vigilant and responsive to the changing economic landscape. Naidoo highlighted the SARB's commitment to supporting the market and stressed the importance of ongoing evaluation to determine the effectiveness of current interventions. As South Africa continues to grapple with the economic fallout of the pandemic, the SARB's proactive measures provide a vital lifeline for the country's financial system and economy.