Bank failures may potentially be contagious, which would render monetary instruments ineffective and cause higher inflation. By contrast, stability in the financial sector enhances financial intermediation, improves the allocation of real resources and provides an environment conducive to the implementation of monetary policy. 7  BIS Review 71/2000  South Africa is fortunate to have a well-developed and sound financial system.
This is also why we launched the process for redesigning our banknotes6. The redesign is part of a long-term development process to ensure that the next generation of euro banknotes will continue to be secure, accepted and an efficient means of payment.