Furthermore, central banks have shifted towards market-based instruments which enhance their ability to respond to shocks. India is one such example, with the increased use of repo and reverse repo operations since the early 2000s, increasing the role of interest rates in the transmission mechanism of monetary policy.
In South Africa’s case, we have come a long way in terms of the development of our own bond market, a process in which the South African Reserve Bank played a major role for a very long time. Today, we have a very deep and liquid bond market, if not the most liquid bond market in the emerging market economies.