The South African Reserve Bank’s initiative of teaching pupils how its monetary policy works and how it relates to the economy as a whole has been taken to a new level.
The new monetary policy committee (MPC) Schools Challenge 2017, which was launched on Friday by Reserve Bank governor Lesetja Kganyago, has been extended to schools in the Eastern Cape, North West and Northern Cape.
It focuses on teaching pupils about how the Reserve Bank works and encourages them to pursue economics as a career.
The Reserve Bank began the MPC Schools Challenge in 2012 in partnership with the Gauteng department of education to offer pupils the opportunity to enhance their understanding of monetary policy and how it related to the economy, help pupils understand better how the economy works, assist pupils to better understand how the MPC makes decisions and improve broad economic literacy in the country.
Now, the initiative will create opportunities for more pupils to put the theory into practice and thereby enhance their understanding of economics. It’s believed this will stimulate interest in a career as an economist and raise awareness.
Addressing pupils at the launch, Kganyago said decisions whether to cut, increase or keep interest rates unchanged were of enormous importance to the economy and affected most people, either directly or indirectly.
“This often raises the question how do central banks make these decisions and, specifically, what factors do the central bank economists take into account when making these decisions?
“One of the channels that many central banks use to explain how they make these decisions and what factors they take into account is to run a competition for high school pupils,” Kganyago said.
Typically, these competitions involve a group of pupils forming their own MPC and making a decision to cut, increase or keep interest rates unchanged.
The MPC Schools Challenge is now available in seven provinces. Next year, the challenge will become national, with the addition of KwaZulu-Natal and the Western Cape.
“We have also partnered with the Department of Basic Education and the provincial education departments.
“We have had 450 schools participate in the challenge since 2012, involving 1340 pupils. By participation, we mean schools whose teams submitted essays,” Kganyago said.
In order to participate in the programme, pupils need to take economics and mathematics, excluding maths literacy.
Certain schools do not qualify as they do not provide this subject combination.
The challenge requires each team to present its case to a panel of Reserve Bank economists. Representatives from the Department of Basic Education moderate the outcome.
To ensure that all entrants have access to the same basic data, the Reserve Bank provides pupils with relevant economic data.
Accessing data is perhaps the easy part.
The first challenge is deciding how the outlook for domestic and global economy impacts on future inflation. This task requires the team to interpret current economic conditions and events, and to apply judgment about the likely future path of the economy.
Kganyago said the MPC team was constantly talking to each other, discussing what they saw and how they interpreted what they saw.
In that sense, the ability to engage with the ideas of fellow workers and collaborate with them will, for a long time to come, remain one of the prized skills by employers.
The MPC Schools Challenge is a contribution by the SA Reserve Bank towards improving the understanding by young South Africans of how the economy works, why high inflation is bad for an economy and how the MPC makes decisions. – 701316