{"id":845650,"date":"2025-12-05T15:00:00","date_gmt":"2025-12-05T13:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=845650"},"modified":"2025-12-05T13:24:19","modified_gmt":"2025-12-05T11:24:19","slug":"reserve-bank-announces-date-of-most-important-financial-reform-in-south-africa-in-decades","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/845650\/reserve-bank-announces-date-of-most-important-financial-reform-in-south-africa-in-decades\/","title":{"rendered":"Reserve Bank announces date of most important financial reform in South Africa in decades"},"content":{"rendered":"\n

The South African Reserve Bank (SARB) has announced that the Johannesburg Interbank Average Rate (JIBAR) will be discontinued next year and replaced by a new system. <\/p>\n\n\n\n

The SARB said that JIBAR will be replaced immediately after its final publication on 31 December 2026.<\/p>\n\n\n\n

The country will then move to the South African Rand Overnight Index Average (ZARONIA), which it said marks the \u201cmost significant reform of the country\u2019s financial markets in decades.\u201d<\/p>\n\n\n\n

Standard Bank stated that the fundamental differences between the two rates will represent a significant shift in pricing, valuation, and legal contracting terms when transitioning to the new systems. <\/p>\n\n\n\n

ZARONIA represents the interest rate at which commercial banks borrow rand-denominated overnight wholesale funds.<\/p>\n\n\n\n

It is based on actual transactions and calculated as a trimmed, volume-weighted mean of interest rates paid on eligible unsecured overnight deposits. <\/p>\n\n\n\n

While ZARONIA is backwards-looking, JIBAR is forward-looking and relies on indicative pricing submissions from a selected bank panel.<\/p>\n\n\n\n

The introduction of ZARONIA eliminates the subjectivity of JIBAR and offers a stable, data-driven rate that reflects the true cost of overnight borrowing.<\/p>\n\n\n\n

The SARB stated that JIBAR had several structural weaknesses, in addition to a sustained decline in the market that underpinned it. <\/p>\n\n\n\n

This created vulnerabilities that cannot be resolved in the foreseeable future. <\/p>\n\n\n\n

In 2022, the SARB and the Market Practitioners Group (MPG) designated ZARONIA as the preferred successor rate to JIBAR. <\/p>\n\n\n\n

The MPG has since worked closely with regulators, market infrastructure providers and industry associations to ensure a smooth transition to ZARONIA.<\/p>\n\n\n\n

To assist market participants, the MPG produced reference materials, including recommended market conventions, fallback language and the JIBAR transition plan. <\/p>\n\n\n\n

Market participants have been encouraged to accelerate their transition efforts and make sure that all relevant financial contracts incorporate appropriate fallback provisions. <\/p>\n\n\n\n

Participants will need to replace their reliance on JIBAR and ensure that they are ready to use ZARONIA.<\/p>\n\n\n\n

Big changes for Reserve Bank <\/h2>\n\n\n
\n
\"\"<\/a>
Reserve Bank Governor Lesetja Kganyago<\/figcaption><\/figure><\/div>\n\n\n

The change to ZARONIA highlights just one of the several major changes led by the SARB. <\/p>\n\n\n\n

This includes the lower inflation target in South Africa, with the SARB, especially Governor Lesetja Kganyago, pushing for a lower target for over a year. <\/p>\n\n\n\n

While the SARB is responsible for achieving an inflation target, it is actually the Minister of Finance who sets the target. <\/p>\n\n\n\n

The SARB called for the 3% to 6% target range to be lowered, and had preemptively decided to anchor expectations to 3%. <\/p>\n\n\n\n

Finance Minister Enoch Godongwana then decided to lower the target to 3% in the medium-term budget, allowing for one percentage point swings in either direction. <\/p>\n\n\n\n

The Reserve Bank has argued that a lower inflation rate will result in lower interest rates in the long term, given the nation’s already high real interest rates.\u00a0<\/p>\n\n\n\n

These potential cuts will add to the 125 basis points worth of cuts from the SARB over the last 15 months, which took the repo rate to 6.75%. <\/p>\n\n\n\n

Outside of interest rates, the SARB also acquired 50% of PayInc, formerly BankservAfrica, to help modernise the national payment system.<\/p>\n","protected":false},"excerpt":{"rendered":"

The SARB is moving from Jibar to ZARONIA, which it calls one of the largest financial market reforms in decades. <\/p>\n","protected":false},"author":95,"featured_media":668661,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[961],"tags":[3619,499],"class_list":["post-845650","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-sarb","tag-standard-bank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/845650","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=845650"}],"version-history":[{"count":5,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/845650\/revisions"}],"predecessor-version":[{"id":845670,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/845650\/revisions\/845670"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/668661"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=845650"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=845650"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=845650"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}