We can say that stable conditions prevail in the financial sector when there is a high degree of confidence that the financial institutions and financial markets are able to meet their contractual obligations. These stable conditions, however, do not preclude the failure of individual financial institutions. A financial institution can fail and be allowed to fail even under stable financial conditions.
It is only when there is the threat of systemic risk and an important part of the financial sector is at risk that the situation can be described as financially unstable. Since inflation is our main focus, you may question where the exchange rate of the rand fits into the monetary policy framework?