The SARB is also looking forward to exploring the potential for sandboxes and innovation hubs to test the relevance of existing regulatory frameworks and make the necessary changes, where appropriate.
Yet, the banking sector plays a key role in the transmission of monetary policy in that it acts as an intermediary between those that have surplus funds and those that have a deficit of funds; therefore, if the negative interest rate policy were to excessively reduce financial institutions’ earnings and undermine the stability of the financial sector, it would make them more reluctant to lend or lead them to demand higher lending rates, which would potentially weaken their functioning as financial intermediaries and thus impair the effects of monetary easing.