Historical Sketch

In the late 15th century, Portuguese navigators reached the southern tip of the African continent. European colonization began in the 17th century with the Dutch arrival at the Cape of Good Hope. Dutch settlers subsequently pushed inwards and displaced the indigenous Xhosa and other states. The Cape was occupied by Great Britain to prevent it from coming under French control when the Netherlands had been occupied by Napoleonic France in the late 18th century. The British Cape Colony was established in 1806. Both Dutch and British settlers continued to expand their grip and to drive out the indigenous population, destroying, among others, the Zulu and Ndebele states in their course. In the mid-19th century, the Dutch settlers retreated inland to evade British rule and formed the so-called Boer Republics of Transvaal (South African Republic), Orange Free State, and Natalia. The latter was reconquered briefly afterwards and became the Natal colony. The others resisted the British during the First Boar War of the early 1880s but were defeated two decades later, in the Second Boer War. In 1900, Orange was defeated and in 1902 also Transvaal. In 1910, the territories of Cape, Transvaal, Natal, and Orange River were merged into the Union of South Africa, constituted as a self-governing British dominion. Full independence from Great Britain was attained in 1932, and in 1961 the republic was proclaimed following a referendum. In 1948, the then ruling party had legally institutionalized a strict racial segregation, called “apartheid”. The system led to a growing political and economic isolation of South Africa so that the regime finally collapsed in 1994, when in a peaceful manner power was handed over to the majority.

Monetary History Overview

The Dutch settlers introduced the homeland's accounting system in 1782, but imposed a 4% commission on Dutch trade coins. The British conquest of the Cape in 1797 did not change the monetary system immediately. Sterling accounting was introduced only in 1826, then the Dutch coins were demonetized within the year. British coins were introduced, and in the 1860s, several commercial banks began issuing paper money. The private money issuance in the Cape was regulated by the Bank Act of 1891. The two Boer Republics never introduced local currencies but remained in the Sterling area. Both the Transvaal and Orange governments issued treasury paper money in the 1860s which depreciated and was withdrawn again. The South African Republic in Transvaal and the Orange Free State both established a partially state-owned commercial bank in 1890, and Transvaal also began issuing gold and subsidiary coins in the British standard briefly afterwards. Otherwise, British currency and banknotes of commercial banks were circulating. The free banking system was regulated in 1893 (Transvaal) and 1902 (Orange). The conquest of the Boer republics in the early 1900s did not change the monetary situation. Except from some emergency government notes the British authorities recognized all notes and coins issued during the republican time. Ten years after the creation of the Union of South Africa the country created its own currency within the Sterling area. In July 1921, the South African Reserve Bank began operations and issued the South African Pound, on par with the Pound Sterling. It became the common currency of all the British possessions and protectorates in Southern Africa, until the three Rhodesian territories introduced a distinct currency in 1940. South Africa attained independence in 1932. The currency remained unchanged for the next three decades. In February 1961, the South African currency went decimal, and the South African Rand at half a Pound became the new unit. The Sterling peg remained in place until 1967, when South Africa did not follow the devaluation of the British currency. The Rand re-pegged to the US Dollar until the exchange rate got floated in 1974. In the same year, South Africa, Botswana, Lesotho and Swaziland signed an agreement to create the Common Monetary Area (CMA), a common currency area based on the Rand. Botswana withdrew in the end, while Namibia joined in 1992. During the economic sanctions against the apartheid regime in the 1980s and early 1990s, the Rand lost about 75% of its value. After the changeover in 1994, a gradual decline has set. During 2001, the Rand lost more than a third of its value but recovered most of the loss in the following years. Another surge occurred in 2008, which could again be corrected soon after. Since the mid-2010s the Rand has started depreciating at a higher pace.

South Africa joined the International Monetary Fund (IMF) on 27.12.1945 as a founding member.

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