30 June 1921 – the establishment of the South African Reserve Bank
The South African Reserve Bank was established shortly after the First World War in terms of the Currency and Banking Act, 1920 (Act No. 31 of 1920) in Parliament. This came into being after a Gold Conference was held in October 1919.
Prior to its establishment, South African commercial banks issued banknotes to the public. These banks had to convert the notes from the public into gold. After the First World War, the price of gold in London rose above the gold price in South Africa, which meant banks could make a profit by converting banknotes into gold and selling the metal in London. Gold had to be purchased at a higher price in London for reimport into South Africa. Banks were obligated to trade at a loss which posed a threat to their existence.
The commercial banks requested the government to release them from the obligation to convert their banknotes into gold on demand. For this reason the Gold Conference was convened to discuss South Africa’s currency.