Moreover, light needs to be shed on which balance-sheet burdens arose under the watch of national supervisors. We therefore need a thorough and rigorous review of balance-sheets. This will be the first test of the SSM and of cooperation between the authorities involved.
In the more sophisticated economies, such as we have in South Africa, money is created by banking institutions through their lending and investment operations. The control over the money supply therefore becomes more difficult, and the central bank can only indirectly influence money creation with instruments such as interest rate variations, overall liquidity management, open market operations, and money market interventions.