The Reserve Bank’s forward book is perhaps a misnomer, and should rather be referred to as an ‘insurance policy’ available to South African residents with foreign exchange exposures, either because they have to make payments in foreign currency or because they will receive payments in foreign currency within the next 12 months.
On the other hand, the Bank seeks to determine the banking sector’s capacity to absorb negative shocks. For this purpose, it utilizes data on bank profitability and capital adequacy and also takes account of the results obtained from stress tests.