The Reserve Bank of New Zealand
February 27th, 2010 Filed under: Uncategorized — Finance Author
The Reserve Bank of New Zealand, which is also called the Reserve Bank or the RBNZ, is the central bank for this small country which lies to the South-East of Australia. It has been owned by the New Zealand Government since 1936, but was established back in 1934. The functions of the RBNZ are enacted under the Reserve Bank Act of 1989, and Amendments and this is where the Reserve Bank gets its powers.
It has a few different roles, all of which are important in the New Zealand economy. Firstly, it looks after monetary policy by manipulating interest rates and the money supply in New Zealand. Secondly, it performs a watchdog role over many of New Zealand’s financial entities which include banks. Thirdly,
it is responsible for, and the only issuer of, paper and coin money in New Zealand.
The Governor of the Reserve Bank is currently Dr Alan Bollard, an academic economist. He holds a PhD from Auckland University in New Zealand and previously headed the Treasury, the New Zealand Institute of Economic Research, and New Zealand’s Commerce Commission. The previous Governor was a Dr Don Brash who was another academic economist educated in New Zealand and Australia.
The Reserve Bank employs around 240 people in different areas and departments. The three main areas are Economics, Financial Stability, and Operations. Financial Stability has Departments of Prudential Supervision, and Financial Markets. Economics is engaged in economic research. Lastly, Operations has six departments which are Risk Assessment and Insurance, the Knowledge Services Group, Human Resources, the Financial Services Group, Communications, and Currency and Building Services.
It is beyond the scope of this article to go into depth about the workings of the Reserve Bank. I hope to do that in future articles on the New Zealand reserve banking system.
The Governor Dr Bollard, appears frequently in the media in New Zealand. His comments are usually reported after he has given a speech or made an announcement. He periodically gives press announcements about the Overnight Cash Rate (OCR). This is an interest rate which affects rates for banks operating in New Zealand. This also affects the rates that New Zealanders are charged for mortgages and other loans from commercial banks.
The Reserve Bank has a Policy Targets Agreement with the Government of New Zealand which requires it have price stability in the New Zealand economy. Price stability is stated as being annual increases in the Consumers Price Index (CPI) of between 1 and 3 per cent per annum over a medium term.
Bob Gold is a social and economic commentator on New Zealand which lies to the South-East of Australia. He currently has no web site links but for subsequent articles he hopes to have them.
