DA calls for investigation into the setting of the South African interbank rate
Tim Harris, DA Spokesperson on Finance
8 July 2012
The DA calls on Finance Minister Pravin Gordhan to mandate a Reserve Bank investigation into the setting of the Johannesburg Interbank Agreed Rate (JIBAR).
The JIBAR is the basis for interest rates across our economy affecting derivatives trades, loan repayments and credit card rates. Any irregular manipulation of the rate would affect everyone from South African investors and borrowers right down to ordinary retail banking clients.
Banking regulators in markets around the world are investigating allegations that the London Interbank Interest Rate (LIBOR) and other interbank rates were rigged by banks to their benefit. Britain, Canada, the US, Japan, Germany and Switzerland have all reportedly undertaken investigations into the setting of rates.
The JIBAR is calculated in a similar manner to the LIBOR, meaning that similar incentives to manipulate the rate could be inherent in our system. The Finance Minister should move quickly to reassure South Africans that the Reserve Bank has thoroughly investigated the setting of JIBAR and is confident that no manipulation has taken place.
Reserve Bank Deputy Governor Daniel Mminele has said that they "have not detected anything that suggests that there could have been any manipulative practices in our market with regards to JIBAR fixing". The full extent of the fraud in the British banking system, however, was also not detected by regulators and only came to light after a full investigation.
The DA calls for an immediate Reserve Bank investigation into the setting of the JIBAR to reassure South Africans investors and borrowers that the rates they have been paying have been fairly set. I will be writing to the Finance Minister in this regard today.