•  Many different arguments questioning whether we need to adjust the way monetary policy is conducted in a globalized world have been set forth. Some relevant questions are: o  Should monetary policy react directly to exchange rate movements, or should it only focus on inflation and real GDP?
While we never had a formal fixed exchange rate regime, South Africa experienced some version of these problems in the early years of our new democratic dispensation. As South Africa reintegrated into the world economy, with import tariffs and capital controls significantly reduced, the prices of our major commodity exports declined, resulting in intense downward pressure on the real exchange rate of the rand.