The reason for building a bigger surplus than this is simple: it is cheaper, simpler and less distortionary to pay repo on excess bank reserves, in quotas, than to manage this liquidity using other tools.
The size of the surplus is therefore based first on what quantity is sufficient to keep rates near the floor, and second on what achieves efficient management of the SARB’s liability structure. At this point in time, it seems safe to say we have successfully implemented a floor or surplus system of monetary policy implementation in South Africa. This has a few interesting implications.