According to Fadel Kaboub, a modern monetary theory economist, a monetary sovereign country is one that issues its own currency, taxes the people in its own currency, issues debt in its own currency and has a floating exchange rate that is not fixed against another currency. Technically, such a country cannot default on its debt. It can also pursue its economic development objectives without worrying too much about the reactions of international investors. Modern monetary theory is an increasingly popular school of economic thought that has been embraced by many democratic socialists in the United States.
South Africa comes close to meeting all four conditions. It has the unique privilege among developing countries of having 90% of its sovereign debt denominated in rands. It also has deep capital markets that were worth R20.7 trillion – four times the size of its R5.1 trillion economy – at the end of December 2019, according to the Reserve Bank. The shares on the JSE stock exchange were worth R17.4 trillion. The government and corporate debt instruments that trade on the bond market were worth R3.3 trillion.
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