From the beginning of this year, the authorities therefore decided to adopt inflation targeting as the formal monetary policy framework of the South African Reserve Bank. This framework should focus monetary policy, increase transparency and lead to a clearer 5  BIS Review 95/2000  accountability of the Reserve Bank. Such a framework also allows for exchange rate flexibility.
Exchange rates should essentially be determined by the supply of and demand for currency in foreign exchange markets. 5. Conclusion  The Reserve Bank’s approach to globalisation has been to adapt our framework as well as the banking structure of the country to comply with the international best practice as understood by international investors and regulators.