Concluding remarks Events over the past year illustrate that the thrust of monetary policy in an integrated financial world should clearly be to pursue financial stability. Although such a policy stance does not provide unconditional protection against volatile international capital movements, it improves the country’s ability to withstand international financial turbulence.
When international financial disruptions affect the South African economy, adjustments will inevitably have to be made to the exchange rate of the rand, domestic liquidity and interest rates. The objective of the monetary authorities should not be to resist such changes, but rather to ease the adjustment process by pursuing consistent and transparent policy measures.