The South African twin peaks model as mechanism to promote and maintain financial stability
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University of Pretoria
Abstract
It is an undeniable fact that the 2008 Global Financial Crisis (GFC) shocked the financial
world, as the world slumped into one of the worst recessions and everybody was affected
by this crisis. The Crisis led to deep reflection regarding the appropriate approach to
financial regulation among economists and financial experts who failed to foresee the
Crisis and regulators who did not heed the warning signs. The Crisis resulted in the world
to this day still being in pursuit of financial stability in order to anticipate and prevent
another similar financial crisis.
Prior to the GFC, regulation was based on sound monetary policy and micro-prudential
supervision which was considered as sufficient in maintaining financial stability. This was,
however, proven to be inadequate during the GFC which showed that promoting and
maintaining financial stability requires a holistic macroprudential approach supported by
sound microprudential regulation and supervision as well as conduct of business
regulation and supervision, and also clear governance structures and principles. The GFC
emphasized the importance of implementing various mechanisms in order to promote and
maintain financial stability. South Africa was not as severely impacted by the GFC as
some other countries, at least not to the extent of financial collapse. Nevertheless, it did
suffer some serious implications such as nearly one million job losses. The GFC also
caused South Africa, as a member of the G20, to commit to align its approach to financial
regulation with various international reforms. Prior to the GFC the South African financial
system was characterized by a silo and fragmented approach to financial regulation. The
South African Government, however, realized that this approach posed many gaps and
in 2017 replaced it with a Twin Peaks model of financial regulation. The Twin Peaks model
was introduced by the Financial Sector Regulation Act 9 of 2017.
This dissertation focuses on the reasons why it was necessary to implement the Twin
Peaks model in South Africa by looking into the causes of the GFC, and interrogating the
role is of the Twin Peaks model as a mechanism to promote and maintain financial
stability. In particular it considers the Twin Peaks model and whether the institutional
framework it creates is likely to contribute to the promotion and maintenance of financial
stability in the country.
Description
Mini Dissertation (LLM (Mercantile Law))--University of Pretoria, 2020.
Keywords
UCTD, The South African Twin Peaks Model
Sustainable Development Goals
Citation
Fourie, DJ 2020, The South African Twin Peaks Model as Mechanism to Promote and Maintain Financial Stability, Mini Dissertation, University of Pretoria