The South African financial rand system was abolished with effect from 13 March 1995. The financial rand system was instituted on 1 September 1985 in an attempt to control the large outflows of capital from South Africa at that time.
The Financial Rand formed part of a system of capital controls, generally called Exchange Controls. While the abolition of the financial rand marked the end of capital controls on Non-Residents, controls remain in place on South African Residents to the present day (September 2012).
The outflows during 1984 - 1985 were largely the result of economic sanctions in response to apartheid..
The financial rand system provided for two exchange rates for the rand, one for current account transactions, and one for capital account transactions for non-residents. Investments made in South Africa by non-residents could only be sold for financial rand, and limitations were placed on the convertibility of financial rand into foreign currencies. Financial rand had the ISO 4217 currency code ZAL. The financial had a previous life, from January 1979 to February 1983. The 1985 crisis coincided with a default (then called a "standstill") on foreign debt by the apartheid government.
Capital controls were originally instituted as a war time measure by Great Britain and the dominions during the Second World War, called the Sterling area. However, following the Sharpeville massacre in 1960, South Africa experienced significant outflows of foreign exchange on the capital account of the Balance of Payments and instituted an additional level of capital controls, known as the Blocked Rand system.
The Blocked Rand system to some extent mirrored the Reichsbank system introduced under Hjalmar Schacht in 1937, called "aski" accounts - short for Auslaender Sonderkonten fuer Inlandszahlungen (foreigners' special accounts for inland payments). In other words creating a closed loop system that did not create a claim on the foreign exchange reserves of the Third Reich, or in this case South Africa.
Famous quotes containing the words financial and/or rand:
“Creditor. One of a tribe of savages dwelling beyond the Financial Straits and dreaded for their desolating incursions.”
—Ambrose Bierce (1842–1914)
“Hard times accounted in large part for the fact that the exposition was a financial disappointment in its first year, but Sally Rand and her fan dancers accomplished what applied science had failed to do, and the exposition closed in 1934 with a net profit, which was donated to participating cultural institutions, excluding Sally Rand.”
—For the State of Illinois, U.S. public relief program (1935-1943)