If properly designed, a crisis resolution instrument, such as the ESM, can provide a vital contribution to stabilisation. All in all, I do, however, currently see the danger that joint liability is being extended, with the result that the existing institutional framework is being clearly stretched, but with the possibilities for control and intervention lagging behind.
The phasing out of exchange control There was general consensus that exchange controls created many distortions in the South African economy. Interest rates, the exchange rate, financial asset and property prices, and even production costs in the domestic economy were affected by the comprehensive exchange controls. The system prevented the important price mechanism of the market economy from functioning properly.