Our History

Beginnings

• 

  1668

  The story of central banking goes back at least to the seventeenth century, to the founding of the first institution recognised as a central bank, the Swedish Riksbank. Established in 1668 as a joint stock bank, it was chartered to lend government funds and act as a commerce clearing house.

• 

  1694

  The Bank of England, established in 1694, is often considered the first true central bank as it not only served as a government bank but also had the power to issue banknotes accepted as legal tender. Initially, it was created to manage the government's debt and to lend money to the government. Over time, the Bank of England evolved into a central institution responsible for monetary policy, managing inflation, and stabilising the national economy. Its functions expanded significantly in the 19th and 20th centuries, particularly after the nationalisation of the bank in 1946, solidifying its role as the central bank of the United Kingdom.

• 

  1880

  Other central banks were set up later in Europe for similar purposes, though some were established to deal with monetary disarray. For example, the Banque de France was established by Napoleon in 1800 to stabilise the currency after the hyperinflation of paper money during the French Revolution, as well as to aid in government finance. Early central banks issued private notes which served as currency, and they often had a monopoly over such note issues.

• 

  1900

  The role and functions of central banks evolved significantly during the 20th century, especially after the Great Depression of the 1930s and World War II. The need for economic stability and the avoidance of financial crises led to the expansion of central banking responsibilities to include the regulation of the banking sector, the implementation of monetary policy, and the management of national currencies.

• 

  1913

  The Federal Reserve System in the United States, established in 1913, is an example of this evolution. The Federal Reserve was created to address the instability caused by bank runs and financial panics. It eventually took on a more active role in controlling inflation and ensuring maximum employment, particularly using tools like open market operations, the discount rate, and reserve requirements.

  While these early central banks helped fund the government’s debt, they were also private entities that engaged in banking activities. Because they held the deposits of other banks, they came to serve as banks for bankers, facilitating transactions between banks or providing other banking services. They became the repository for most banks in the banking system because of their large reserves and extensive networks of correspondent banks. These factors allowed them to become the lender of last resort in the face of a financial crisis. In other words, they became willing to provide emergency cash to their correspondents in times of financial distress.

• 

  1944

  The Bretton Woods Agreement of 1944 further solidified the importance of central banks in the global economy. This agreement led to the establishment of the International Monetary Fund (IMF) and the World Bank and created a system of fixed exchange rates that required central banks to maintain currency stability.

The First Central Bank in Africa

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  1921

  The first central bank in Africa was the South African Reserve Bank (SARB), established in 1921. Its creation followed a financial crisis in 1920 that highlighted the need for a central monetary authority to stabilize the economy and manage the money supply. The SARB was modelled after the Bank of England and took on many of the same functions, including issuing banknotes, acting as the banker to the government, and managing gold reserves.

Central Banking in Africa

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  20th Century

  The colonial period significantly influenced the development of central banking in Africa. Most African countries did not have central banks until they gained independence in the mid-20th century. Before independence, the monetary systems in African colonies were typically managed by the central banks of their respective colonial powers or by regional currency boards.

• 

  1957

  After independence, the newly sovereign African nations established their central banks to assert economic independence and to support national development. For example, the Bank of Ghana was established in 1957, the same year the country gained independence. This marked the beginning of a wave of central bank establishments across the continent.

The Establishment of the Bank of Namibia

• 

  1990

  The Bank of Namibia was established on July 16, 1990, shortly after Namibia gained independence from South Africa. The establishment of the Bank was a significant step in asserting Namibia’s economic sovereignty and laying the foundation for the country's financial system. The Bank of Namibia was tasked with managing the national currency, implementing monetary policy, and ensuring financial stability in the newly independent nation. Over the years, the Bank has evolved into a modern central bank, focusing not only on traditional central banking roles but also on promoting economic development and financial inclusion within Namibia. The Bank's commitment to innovation and its role in driving economic growth reflect the broader evolution of central banking in Africa as a vital instrument for national development.

  Central banks in Africa initially focused on issuing currency, managing foreign exchange reserves, and financing government activities. Over time, they have taken on broader roles, including the regulation of commercial banks, the management of inflation, and the promotion of financial inclusion.

Central Banking in the Common Monetary Area (CMA)

• 

  1990

  As Namibia established its central bank and introduced the Namibian Dollar, it became part of the broader economic framework of the Common Monetary Area (CMA), a monetary union consisting of Namibia, South Africa, Lesotho, and Eswatini (Swaziland). The CMA, established in 1974 as the successor to the Rand Monetary Area, allows member countries to maintain their own currencies while pegging them to the South African Rand. This arrangement facilitates trade and economic stability among member states, with the South African Reserve Bank playing a pivotal role due to its economic size and influence within the region.

  Namibia's participation in the CMA has provided both opportunities and challenges. On the one hand, the peg to the South African Rand has helped maintain currency stability and has facilitated trade with Namibia's largest trading partner, South Africa. On the other hand, the reliance on the Rand's value means that Namibia's monetary policy is somewhat influenced by economic conditions in South Africa, limiting the Bank of Namibia's autonomy in certain aspects of monetary policy.

  Despite these challenges, the Bank of Namibia has successfully navigated its role within the CMA, focusing on balancing national economic priorities with the benefits of regional economic integration. The Bank continues to play a crucial role in ensuring financial stability, promoting economic growth, and enhancing financial inclusion in Namibia while contributing to the overall stability and development of the CMA.

  In recent decades, African central banks have been increasingly involved in addressing the unique challenges of their economies, such as managing the effects of commodity price fluctuations, dealing with high levels of informal economic activity, and promoting financial stability in the face of global financial volatility.

  The history of central banking is a tale of gradual evolution from simple institutions managing government debt and currency to complex entities responsible for the broader stability and growth of national and global economies. In Africa, the establishment of central banks has been a key component of the post-independence economic strategy, helping to shape the financial systems and economic policies of the continent's nations. As Africa continues to develop, the role of central banks will remain crucial in ensuring sustainable economic growth and financial stability.