Reserve Bank of Australia
Encyclopedia
The Reserve Bank of Australia came into being on 14 January 1960 as Australia
's central bank
and banknote issuing authority, when the Reserve Bank Act 1959 removed the central banking functions from the Commonwealth Bank to it.
The Bank has the responsibility of providing services to the Government of Australia
in addition to also providing services to other central banks and official institutions. It currently consists of the Payments System Board, which governs the payments system
policy of the Bank, and the Reserve Bank Board, which governs all other monetary and banking policies of the bank.
Both Boards consist of members of both the Bank, the Treasury
, other Australian government agencies, and leaders of other institutions that are part of the economy
. The structure of the Reserve Bank Board has remained consistent ever since 1951, with the exception of the change in the number of members of the Board. The Governor of the Reserve Bank of Australia is appointed by the Treasurer
and chairs both the Payment Systems and Reserve Bank Boards and when there are disagreements between both Boards, the Governor resolves them.
From the middle of the 19th century into the 1890s, the prospects of a national bank
forming grew. In 1911, the Commonwealth Bank was established, but did not have the authority to print notes, which was a power that was still reserved to the Treasury. A movement toward reestablishing the gold standard
occurred after World War I
, with John Garvan leading various boards in contracting the money supply
on the route to doing so, and the gold standard was instituted for both the British pound sterling
and the Australian pound
in 1925.
During the Great Depression
, the Australian pound became devalued, no longer worth the pound sterling, and formally departed from the gold standard with the Commonwealth Bank Act of 1932. Legislation in 1945 led to regulation
of private banks which H.C. Coombs was opposed to, and when he became Governor in 1949, he gave them more overall control over their institutions. When the monetary authorities implemented the advice of Coombs to have a flexible interest rate
, it allowed the Bank to rely more on open market operations.
The float of the Australian dollar
happened in 1983, around the same period of time that the financial system in Australia was deregulated. Administration of the banks was transferred in 1998 from the Bank to the Australian Prudential Regulation Authority
and the Payments System Board was created, while the Bank was given power within the said Board in the same year. The current Governor of the Reserve Bank is Glenn Stevens
, who has been the incumbent since 18 September 2006.
The proposition of a national bank
in Australia
began to be raised in the middle of the 19th century. This interest accelerated significantly in the 1890s
due to an austere collapse
of both the financial
and banking sectors at the beginning of that decade. The Australian Labor Party
consequently formed during the same decade and proposed a bank should be formed, which would be a protected and cheap way of having financial services
. The party designed a platform in 1908 for a "Commonwealth Bank," which would be a combination of both a commercial
and central bank
.
Regardless, Andrew Fisher
's Labor government introduced legislation in 1911 for merely a government-owned commercial bank
, without a complete central banking component. He stated that "Time and experience will show how its functions for usefulness may be extended [towards central banking]." The only function at the time that made the Bank characteristic of a central one was that it was the banker to the Australian government
, in addition to it being the same for the states. For the time being, the Treasury of Australia
maintained the role of issuing bank notes through the Notes Act of 1910.
The Commonwealth Bank of Australia
gradually developed into the central bank of Australia. In response to the disruption of trade during World War I
(1914–1918) the Commonwealth Bank began to manage the debt of the Australian government. Nevertheless, at the end of the war, the Bank continued to have a primary role as a savings
and trading bank. World War I had caused the currency of Australia to move away from the gold standard
, in order to fund a great increase of government spending
, as did the United Kingdom
and other parts of the British Empire
.
The value of the Australian pound
remained tied to the pound sterling
. Inflation
in Australia thus increased, less than in Britain, but more than in the United States
. The case for a central bank was increased by the need for the government to cut spending after the war to reduce its debt. Commonwealth Bank Governor Denison Miller
had been arguing for the issue of Australian currency to be switched from the Treasury to the Bank, as it had more staff and more monetary knowledge.
The Australian Notes Board (ANB) was created in 1920 and partially acceded to the request of Miller, in having four directors, with the Governor of the Bank being an ex officio member. The ANB began to follow a policy of Board member John Garvan, in contracting the money supply
, with the goal of reducing prices so that free convertibility of the Australian pound to gold could be re-established at pre-war rates, that is return to the former gold standard.
This was accomplished by refusing the exchange of notes for gold and it was hoped that this would lower domestic prices and raise the exchange rate for the Australian pound. When gold arrived from New York
, the government sold securities in order to diminish the effect of monetary expansion, therefore executing the first open market operations in the history of Australia and thus the first attempt of central banking.
and Country Party
Leader Earle Page
wanting to end the monetary contraction which particularly hurt his farming constituents, who were as a result receiving reduced export prices. The new Board of Directors replacing it, which was composed of various areas of the industry
, soon appointed Garvan chairman, and thus he continued his policies. In 1925, both the pound sterling and Australian pound returned to the pre-war gold standard. The primary role of the Commonwealth Bank continued to be a savings and trading bank, even though the government attempted to make the Bank into a central one through its actions in 1924.
Legislation was introduced to the Parliament
at the climax of the Great Depression
, in May 1930, by Treasurer E.G. Theodore, which would remove central banking powers from the Commonwealth Bank into a new central bank, but this failed. The Australian pound became devalued in 1931 and it was no longer worth a pound sterling
. The Reserve Bank departed from the gold standard with the Commonwealth Bank Act of 1932, which made the notes no longer exchangeable into gold and allowed the bank not to keep any gold reserves. The monetary policy
of the Bank from 1931 until the early 1970s had been to keep a stable exchange rate
with the pound sterling.
Through the new Commonwealth Bank Act and the Banking Act in 1945, the Board was replaced by a six-member council, fully consisting of Bank and Treasury officials. It additionally formalised the Bank's administrative powers of monetary and banking policy and exchange control and also stated the Governor was responsible for managing the Bank. Highly debated legislation in 1945 caused high amounts of regulation on private banks, which later-Governor H.C. Coombs was opposed to, along with his opposition to bank nationalisation in 1947. When he became Governor in 1949, he allowed the private banks to have more control over their liquidity and attempted to introduce market-based
monetary policy. He also warned of the possibility of stagflation
in 1959.
Legislation in 1951, removing the council, established another then 10-member board which consisted of Governor, Deputy Governor and the Secretary to the Treasury. This board took on the job of managing the Bank from the Governor. Many years later, the Reserve Bank Act 1959 took out the part of the Commonwealth Bank that executed central banking and placed it into the new Reserve Bank of Australia, while the commercial and savings bank functions stayed with the Commonwealth Bank. This finally created a separate central bank for Australia in 1959, which took effect 14 January 1960, many years after several other nations already had one and similar to the early proposal by Treasurer Theodore.
In the mid 1960s, monetary authorities accepted Coombs' conclusions and allowed a flexible interest rate
, making it easier for the Bank to rely on open market operations. The Exchange Control was abolished after the float of the Australian dollar
occurred in 1983. In the five years after the Campbell Committee probe, 1979–1984, the financial system in Australia became deregulated
. Another probe was the Wallis Committee in 1996, which took effect in 1998. The effects were the transfer of overseeing the banks from the RBA to the Australian Prudential Regulation Authority
(APRA) and the creation of the Payments System Board (PSB), which would attempt to maintain the safety and performance of the payments system. The Bank was given powers within the PSB through additional legislation in 1998.
In August 1996, then Governor-designate Ian Macfarlane
and the Treasurer issued a Statement on the Conduct of Monetary Policy which restated the roles of the Reserve Bank and the Government of Australia
. It affirmed government endorsement of the Reserve Bank's inflation objective, which was introduced in 1993. A change of government in December 2007 led to another Statement, which was issued by both Treasurer Wayne Swan
and Reserve Bank Governor Glenn Stevens
. This amends previous statements by giving the Bank independence and encourages transparency and communication
.
Since 2007, the RBA's outstanding reputation has been affected by the 'Securency' or NPA scandal. These RBA subsidiaries were involved in bribing overseas officials so that Australia might win lucrative note-printing contracts. Australian press coverage, which has continued into late 2011, reflects concerns with the apparent laxity and tardiness of corrective actions undertaken by relevant RBA board members and officials. The matters were not referred to the Federal Police in 2007, although they are now, while in 2011 it has been revealed that the RBA had to correct evidence given to Parliamentary committees.
It is currently governed by the Reserve Bank Act 1959, which was approved by Parliament
. The Reserve Bank Board's duty stated in the Act, within its outlined boundaries, is to ensure that the Bank's monetary and banking policy is used to help the Australian population. This should be accomplished through consultation with the Government
and so in the Reserve Bank Board's opinion that its powers are used to help with:
In practice the Reserve Bank concentrates on the first objective
, that is to control inflation
through monetary policy
. The current objective is a policy of inflation targeting
aimed at maintaining the annual inflation rate at between "2-3 per cent, on average, over the cycle
". This target was first set in 1993 by the then Reserve Bank Governor Bernie Fraser and was then formalised in 1996 by the then Treasurer
Peter Costello
and incoming Reserve Bank Governor Ian Mcfarlane.
The Reserve Bank gives banking and registry
services to agencies of the Government, to other central banks, and other official institutions. The assets of the Bank include the gold and foreign exchange reserves of Australia, which is estimated to have a net worth
of A$101 billion.
Nearly 94% of the RBA's employees work at its headquarters in Sydney
and at the Business Resumption Site. The remainder of the total 926 staff work in Adelaide
, Brisbane
, Canberra
, Melbourne
, Perth
, London
and New York
. A wholly owned subsidiary
of the bank is Note Printing Australia
, which employs 257 other workers, and which manufactures the Australian dollar
and other securities, for markets both in and outside of Australia.
The Payments System Board fills the role of deciding on the Bank's payments system policy and the Reserve Bank Board is responsible for all other monetary and banking policies of the bank. Conflicts between the two Boards don't occur often and when they do, they are resolved by the Governor.
In addition, the Board is composed of six external members who are appointed by the Treasurer for a period of five years. According to section 17(1) of the Reserve Bank Act, members of the Board are not allowed to be a director, officer, or employee of an institution that is authorised to take in deposits. Excluding changes in the number of directors, the structure of the board of directors has remained unchanged since 1951.
The current members of the board of directors are:
The board normally meets eleven times each year, on the first Tuesday of each month, with the exception of January which has no meeting. Every year, the Board meets at least once in Melbourne
, which is usually in the first six months of the year. The Board occasionally also meets in other Australian capitals. Five members of the Board must meet in order to form a meeting of the Board, which must be chaired by the Governor, or the Deputy Governor in his absence.
The Board usually forms a consensus without a need for structured voting on the issues at hand. Meetings of the Board are held in the Boardroom of the Reserve Bank's Head Office in Sydney
or the equivalent in other Regional Offices of the Bank. The meetings begin at 9.00 am
and continue for three and a half hours, with a lunch at the end and perhaps a guest speaker. Minutes of the monetary policy
Board meetings are published two weeks after the meeting is held.
s policy. This is done so it can command risk and to aid in competitiveness and balance in the financial system. The Bank's power through the Payment Systems Act 1998 allows it to regulate
any payment system and can create binding rules for security and performance in the system. If members of a payment system are at odds over issues of market risk
, admission, safety, and rivalry, the RBA can additionally administer arbitration
with the consent of those involved. The Reserve Bank is also permitted to gather information from a payment system or participants thereof. The Bank was also given the power to regulate the competition of transactions
in August 2001.
The Payment Systems and Netting Act 1998 gives the Board power in areas of the law that were previously uncertain. It removed the zero hour rule that allowed a court to date a bankruptcy
the previous midnight
and the Act made it so payments the same day could not be undone. Before the removal of the zero hour rule, the Real Time Gross Settlement
system had been violated because payments in the system should inherently not be reverted. Some payments systems had previously agreed to pay and receive obligations to the whole system, rather than merely maintaining their own. But in the event of a bankruptcy
, the bankrupt institution did not pay what it owed back to the solvent parties, while they had to pay their dues to the failed bank. This was later changed, when cheques were deemed void
if the bankrupt institution doesn't have the funds to back them up, after the Cheques Act 1986 was amended in 1998. The Trade Practices Act 1974 generally does not allow competitors to make cooperative agreements, but if The Australian Competition and Consumer Commission
(ACCC) is permitted to make exceptions for competitors making agreements among themselves. The ACCC and the Payments Systems Board are encouraged to work together regarding access and rivalry through the Payment Systems (Regulation) Act 1998.
Members of the Payment Systems Board are defined by Section 25A of the Reserve Bank Act 1959, with three of the members being ex officio or representatives of another organisation. The Governor of the Reserve Bank of Australia is the Chairman of the Payments System Board, there is one representative of the RBA, and there is one representative of the Australian Prudential Regulation Authority
(APRA). In addition, there are up to five other members of the Board that are appointed by the Treasurer for a term up to five years in length. They meet once per quarter, with five members forming a quorum
, and one meeting per year is generally held in Melbourne, while the rest are held in Sydney. The Chairman is to meet with the Chairman of the ACCC at least once annually on issues of interest to both parties in the payments system, in addition to members of both organisations consulting over issues that are mutually important.
The current members of the Payments System Board are:
The Governor of the Reserve Bank of Australia is the most senior position in the Reserve Bank of Australia. The Governor of the Commonwealth Bank of Reserve Bank of Australia was both an ex officio member of the Notes Board from 1920 to 1924 and of the eight directors of the Commonwealth Bank from 1924 to 1945. The Commonwealth Bank and Bank Acts in 1945 clearly stated the Governor's responsibilities of managing the Bank. In 1951, legislation established a 10-member board which the Governor is a member of. The Bank has maintained a similar structure ever since the 1951 legislation.
The Governor is required by the Reserve Bank Act 1959 to keep in contact with the Secretary
on matters concerning both the Treasury and Reserve Bank and vice versa. It is also mandated that the Board inform the Government of the Bank's monetary and banking policy, which is often accomplished through the Governor's meetings with the Treasurer. Since 1996, the Governor and other senior members of the Bank have appeared twice annually before the House of Representatives Standing Committee on Economics
to explain the conduct of the Bank. The Reserve Bank Governor is appointed to a term of up to seven years by the Treasurer and are eligible to be reappointed at the end of their term. The Governor is the Chairman of both the Payment Systems Board and the Reserve Bank Board and therefore resolves any disputes that occur between the two entities.
The longest serving Governor, if his service to both the Commonwealth Bank and the Reserve Bank of Australia are included, is H.C. Coombs, who served nineteen years and six months combined. He is regarded by some as one of the most committed anti-inflationists in government throughout the 1950s
and 60s
. The longest-serving Commonwealth Bank Governor is Sir Ernest Riddle
, who served eleven years and four months, while the longest-serving Reserve Bank Governor is Ian Macfarlane
, who served ten years. The shortest-serving Governor by many years is James Kell who served 2 years for the Commonwealth Bank.
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
's central bank
Central bank
A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...
and banknote issuing authority, when the Reserve Bank Act 1959 removed the central banking functions from the Commonwealth Bank to it.
The Bank has the responsibility of providing services to the Government of Australia
Government of Australia
The Commonwealth of Australia is a federal constitutional monarchy under a parliamentary democracy. The Commonwealth of Australia was formed in 1901 as a result of an agreement among six self-governing British colonies, which became the six states...
in addition to also providing services to other central banks and official institutions. It currently consists of the Payments System Board, which governs the payments system
Payment system
A payment system is a system used for transferring money. What makes it a "system" is that it employs cash-substitutes; traditional payment systems are negotiable instruments such as drafts and documentary credits such as letter of credits. With the advent of computers and electronic...
policy of the Bank, and the Reserve Bank Board, which governs all other monetary and banking policies of the bank.
Both Boards consist of members of both the Bank, the Treasury
Department of the Treasury (Australia)
The Department of the Treasury is an Australian Government department. Its role is to focus and develop economic policy.-History:The Commonwealth Treasury was established in Melbourne in January 1901....
, other Australian government agencies, and leaders of other institutions that are part of the economy
Economy of Australia
The economy of Australia is a developed, modern market economy with a GDP of approximately US$1.23 trillion. In 2011, it was the 13th largest national economy by nominal GDP and the 17th largest measured by PPP adjusted GDP, representing about 1.7% of the World economy. Australia was also ranked...
. The structure of the Reserve Bank Board has remained consistent ever since 1951, with the exception of the change in the number of members of the Board. The Governor of the Reserve Bank of Australia is appointed by the Treasurer
Treasurer of Australia
The Treasurer of Australia is the minister in the Government of Australia responsible for government expenditure and revenue raising. He is the head of the Department of the Treasury. The Treasurer plays a key role in the economic policy of the government...
and chairs both the Payment Systems and Reserve Bank Boards and when there are disagreements between both Boards, the Governor resolves them.
From the middle of the 19th century into the 1890s, the prospects of a national bank
National bank
In banking, the term national bank carries several meanings:* especially in developing countries, a bank owned by the state* an ordinary private bank which operates nationally...
forming grew. In 1911, the Commonwealth Bank was established, but did not have the authority to print notes, which was a power that was still reserved to the Treasury. A movement toward reestablishing the gold standard
Gold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...
occurred after World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
, with John Garvan leading various boards in contracting the money supply
Money supply
In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time. There are several ways to define "money," but standard measures usually include currency in circulation and demand deposits .Money supply data are recorded and published, usually...
on the route to doing so, and the gold standard was instituted for both the British pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
and the Australian pound
Australian pound
The pound was the currency of Australia from 1910 until 13 February 1966, when it was replaced by the Australian dollar. It was subdivided into 20 shillings, each of 12 pence.- Earlier Australian currencies :...
in 1925.
During the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
, the Australian pound became devalued, no longer worth the pound sterling, and formally departed from the gold standard with the Commonwealth Bank Act of 1932. Legislation in 1945 led to regulation
Regulation
Regulation is administrative legislation that constitutes or constrains rights and allocates responsibilities. It can be distinguished from primary legislation on the one hand and judge-made law on the other...
of private banks which H.C. Coombs was opposed to, and when he became Governor in 1949, he gave them more overall control over their institutions. When the monetary authorities implemented the advice of Coombs to have a flexible interest rate
Interest rate
An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. For example, a small company borrows capital from a bank to buy new assets for their business, and in return the lender receives interest at a predetermined interest rate for...
, it allowed the Bank to rely more on open market operations.
The float of the Australian dollar
Australian dollar
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...
happened in 1983, around the same period of time that the financial system in Australia was deregulated. Administration of the banks was transferred in 1998 from the Bank to the Australian Prudential Regulation Authority
Australian Prudential Regulation Authority
The Australian Prudential Regulation Authority is a statutory authority and the prudential regulator of the Australian financial services industry.-Regulatory scope:...
and the Payments System Board was created, while the Bank was given power within the said Board in the same year. The current Governor of the Reserve Bank is Glenn Stevens
Glenn Stevens
Glenn Robert Stevens is an Australian economist and the current Governor of the Reserve Bank of Australia.-Early life and education:...
, who has been the incumbent since 18 September 2006.
History (Mid 19th century–1924)
National bank
In banking, the term national bank carries several meanings:* especially in developing countries, a bank owned by the state* an ordinary private bank which operates nationally...
in Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
began to be raised in the middle of the 19th century. This interest accelerated significantly in the 1890s
1890s
The 1890s were sometimes referred to as the "Mauve Decade" - because William Henry Perkin's aniline dye allowed the widespread use of that colour in fashion - and also as the "Gay Nineties", under the then-current usage of the word "gay" which referred simply to merriment and frivolity, with no...
due to an austere collapse
Australian banking crisis of 1893
The 1893 banking crisis occurred in Australia when several of the commercial banks of the colonies within Australia collapsed.During the 1880s there was a speculative boom in the Australian property market...
of both the financial
FINANCIAL
FINANCIAL is the weekly English-language newspaper with offices in Tbilisi, Georgia and Kiev, Ukraine. Published by Intelligence Group LLC, FINANCIAL is focused on opinion leaders and top business decision-makers; It's about world’s largest companies, investing, careers, and small business. It is...
and banking sectors at the beginning of that decade. The Australian Labor Party
Australian Labor Party
The Australian Labor Party is an Australian political party. It has been the governing party of the Commonwealth of Australia since the 2007 federal election. Julia Gillard is the party's federal parliamentary leader and Prime Minister of Australia...
consequently formed during the same decade and proposed a bank should be formed, which would be a protected and cheap way of having financial services
Financial services
Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance companies, consumer finance companies,...
. The party designed a platform in 1908 for a "Commonwealth Bank," which would be a combination of both a commercial
Commercial bank
After the implementation of the Glass–Steagall Act, the U.S. Congress required that banks engage only in banking activities, whereas investment banks were limited to capital market activities. As the two no longer have to be under separate ownership under U.S...
and central bank
Central bank
A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...
.
Regardless, Andrew Fisher
Andrew Fisher
Andrew Fisher was an Australian politician who served as the fifth Prime Minister on three separate occasions. Fisher's 1910-13 Labor ministry completed a vast legislative programme which made him, along with Protectionist Alfred Deakin, the founder of the statutory structure of the new nation...
's Labor government introduced legislation in 1911 for merely a government-owned commercial bank
Commercial bank
After the implementation of the Glass–Steagall Act, the U.S. Congress required that banks engage only in banking activities, whereas investment banks were limited to capital market activities. As the two no longer have to be under separate ownership under U.S...
, without a complete central banking component. He stated that "Time and experience will show how its functions for usefulness may be extended [towards central banking]." The only function at the time that made the Bank characteristic of a central one was that it was the banker to the Australian government
Government of Australia
The Commonwealth of Australia is a federal constitutional monarchy under a parliamentary democracy. The Commonwealth of Australia was formed in 1901 as a result of an agreement among six self-governing British colonies, which became the six states...
, in addition to it being the same for the states. For the time being, the Treasury of Australia
Department of the Treasury (Australia)
The Department of the Treasury is an Australian Government department. Its role is to focus and develop economic policy.-History:The Commonwealth Treasury was established in Melbourne in January 1901....
maintained the role of issuing bank notes through the Notes Act of 1910.
Commonwealth Bank of Australia
The Commonwealth Bank of Australia is a multinational bank with businesses across New Zealand, Fiji, Asia, USA and the United Kingdom. Commonwealth Bank provides a variety of financial services including retail, business and institutional banking, funds management, superannuation, insurance,...
gradually developed into the central bank of Australia. In response to the disruption of trade during World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
(1914–1918) the Commonwealth Bank began to manage the debt of the Australian government. Nevertheless, at the end of the war, the Bank continued to have a primary role as a savings
Savings bank
A savings bank is a financial institution whose primary purpose is accepting savings deposits. It may also perform some other functions.In Europe, savings banks originated in the 19th or sometimes even the 18th century. Their original objective was to provide easily accessible savings products to...
and trading bank. World War I had caused the currency of Australia to move away from the gold standard
Gold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...
, in order to fund a great increase of government spending
Government spending
Government spending includes all government consumption, investment but excludes transfer payments made by a state. Government acquisition of goods and services for current use to directly satisfy individual or collective needs of the members of the community is classed as government final...
, as did the United Kingdom
United Kingdom of Great Britain and Ireland
The United Kingdom of Great Britain and Ireland was the formal name of the United Kingdom during the period when what is now the Republic of Ireland formed a part of it....
and other parts of the British Empire
British Empire
The British Empire comprised the dominions, colonies, protectorates, mandates and other territories ruled or administered by the United Kingdom. It originated with the overseas colonies and trading posts established by England in the late 16th and early 17th centuries. At its height, it was the...
.
The value of the Australian pound
Australian pound
The pound was the currency of Australia from 1910 until 13 February 1966, when it was replaced by the Australian dollar. It was subdivided into 20 shillings, each of 12 pence.- Earlier Australian currencies :...
remained tied to the pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
. Inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
in Australia thus increased, less than in Britain, but more than in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. The case for a central bank was increased by the need for the government to cut spending after the war to reduce its debt. Commonwealth Bank Governor Denison Miller
Denison Miller
Sir Denison Samuel King Miller KCMG, was the first governor of the Commonwealth Bank of Australia.-Early life:Miller was born at Fairy Meadow, near Wollongong, New South Wales, the son of Samuel King Miller, head teacher of the Deniliquin public school and his wife Sarah Isabella, née Jones where...
had been arguing for the issue of Australian currency to be switched from the Treasury to the Bank, as it had more staff and more monetary knowledge.
The Australian Notes Board (ANB) was created in 1920 and partially acceded to the request of Miller, in having four directors, with the Governor of the Bank being an ex officio member. The ANB began to follow a policy of Board member John Garvan, in contracting the money supply
Money supply
In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time. There are several ways to define "money," but standard measures usually include currency in circulation and demand deposits .Money supply data are recorded and published, usually...
, with the goal of reducing prices so that free convertibility of the Australian pound to gold could be re-established at pre-war rates, that is return to the former gold standard.
This was accomplished by refusing the exchange of notes for gold and it was hoped that this would lower domestic prices and raise the exchange rate for the Australian pound. When gold arrived from New York
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
, the government sold securities in order to diminish the effect of monetary expansion, therefore executing the first open market operations in the history of Australia and thus the first attempt of central banking.
History (1924–present)
The Department of Treasury issued notes until 1924, when this responsibility was transferred to the Commonwealth Bank. The ANB was abolished through amendments to the Commonwealth Bank Act in 1924, due to TreasurerTreasurer of Australia
The Treasurer of Australia is the minister in the Government of Australia responsible for government expenditure and revenue raising. He is the head of the Department of the Treasury. The Treasurer plays a key role in the economic policy of the government...
and Country Party
National Party of Australia
The National Party of Australia is an Australian political party.Traditionally representing graziers, farmers and rural voters generally, it began as the The Country Party, but adopted the name The National Country Party in 1975, changed to The National Party of Australia in 1982. The party is...
Leader Earle Page
Earle Page
Sir Earle Christmas Grafton Page, GCMG, CH was the 11th Prime Minister of Australia, and is to date the second-longest serving federal parliamentarian in Australian history, with 41 years, 361 days in Parliament.-Early life:...
wanting to end the monetary contraction which particularly hurt his farming constituents, who were as a result receiving reduced export prices. The new Board of Directors replacing it, which was composed of various areas of the industry
Economy of Australia
The economy of Australia is a developed, modern market economy with a GDP of approximately US$1.23 trillion. In 2011, it was the 13th largest national economy by nominal GDP and the 17th largest measured by PPP adjusted GDP, representing about 1.7% of the World economy. Australia was also ranked...
, soon appointed Garvan chairman, and thus he continued his policies. In 1925, both the pound sterling and Australian pound returned to the pre-war gold standard. The primary role of the Commonwealth Bank continued to be a savings and trading bank, even though the government attempted to make the Bank into a central one through its actions in 1924.
Legislation was introduced to the Parliament
Parliament of Australia
The Parliament of Australia, also known as the Commonwealth Parliament or Federal Parliament, is the legislative branch of the government of Australia. It is bicameral, largely modelled in the Westminster tradition, but with some influences from the United States Congress...
at the climax of the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
, in May 1930, by Treasurer E.G. Theodore, which would remove central banking powers from the Commonwealth Bank into a new central bank, but this failed. The Australian pound became devalued in 1931 and it was no longer worth a pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
. The Reserve Bank departed from the gold standard with the Commonwealth Bank Act of 1932, which made the notes no longer exchangeable into gold and allowed the bank not to keep any gold reserves. The monetary policy
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...
of the Bank from 1931 until the early 1970s had been to keep a stable exchange rate
Exchange rate
In finance, an exchange rate between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency...
with the pound sterling.
Through the new Commonwealth Bank Act and the Banking Act in 1945, the Board was replaced by a six-member council, fully consisting of Bank and Treasury officials. It additionally formalised the Bank's administrative powers of monetary and banking policy and exchange control and also stated the Governor was responsible for managing the Bank. Highly debated legislation in 1945 caused high amounts of regulation on private banks, which later-Governor H.C. Coombs was opposed to, along with his opposition to bank nationalisation in 1947. When he became Governor in 1949, he allowed the private banks to have more control over their liquidity and attempted to introduce market-based
Market economy
A market economy is an economy in which the prices of goods and services are determined in a free price system. This is often contrasted with a state-directed or planned economy. Market economies can range from hypothetically pure laissez-faire variants to an assortment of real-world mixed...
monetary policy. He also warned of the possibility of stagflation
Stagflation
In economics, stagflation is a situation in which the inflation rate is high and the economic growth rate slows down and unemployment remains steadily high...
in 1959.
In the mid 1960s, monetary authorities accepted Coombs' conclusions and allowed a flexible interest rate
Interest rate
An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. For example, a small company borrows capital from a bank to buy new assets for their business, and in return the lender receives interest at a predetermined interest rate for...
, making it easier for the Bank to rely on open market operations. The Exchange Control was abolished after the float of the Australian dollar
Australian dollar
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...
occurred in 1983. In the five years after the Campbell Committee probe, 1979–1984, the financial system in Australia became deregulated
Deregulation
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...
. Another probe was the Wallis Committee in 1996, which took effect in 1998. The effects were the transfer of overseeing the banks from the RBA to the Australian Prudential Regulation Authority
Australian Prudential Regulation Authority
The Australian Prudential Regulation Authority is a statutory authority and the prudential regulator of the Australian financial services industry.-Regulatory scope:...
(APRA) and the creation of the Payments System Board (PSB), which would attempt to maintain the safety and performance of the payments system. The Bank was given powers within the PSB through additional legislation in 1998.
In August 1996, then Governor-designate Ian Macfarlane
Ian Macfarlane (economist)
Ian John Macfarlane, AC , Australian economist, and Governor of the Reserve Bank of Australia , Australia's central bank, from 1996 to 17 September 2006...
and the Treasurer issued a Statement on the Conduct of Monetary Policy which restated the roles of the Reserve Bank and the Government of Australia
Government of Australia
The Commonwealth of Australia is a federal constitutional monarchy under a parliamentary democracy. The Commonwealth of Australia was formed in 1901 as a result of an agreement among six self-governing British colonies, which became the six states...
. It affirmed government endorsement of the Reserve Bank's inflation objective, which was introduced in 1993. A change of government in December 2007 led to another Statement, which was issued by both Treasurer Wayne Swan
Wayne Swan
Wayne Maxwell Swan is the Deputy Prime Minister of Australia and an Australian politician. He has been an Australian Labor Party member of the Australian House of Representatives from 1993 to 1996, and then re elected in 1998 till today , representing the Division of Lilley, QLD...
and Reserve Bank Governor Glenn Stevens
Glenn Stevens
Glenn Robert Stevens is an Australian economist and the current Governor of the Reserve Bank of Australia.-Early life and education:...
. This amends previous statements by giving the Bank independence and encourages transparency and communication
Communication
Communication is the activity of conveying meaningful information. Communication requires a sender, a message, and an intended recipient, although the receiver need not be present or aware of the sender's intent to communicate at the time of communication; thus communication can occur across vast...
.
Since 2007, the RBA's outstanding reputation has been affected by the 'Securency' or NPA scandal. These RBA subsidiaries were involved in bribing overseas officials so that Australia might win lucrative note-printing contracts. Australian press coverage, which has continued into late 2011, reflects concerns with the apparent laxity and tardiness of corrective actions undertaken by relevant RBA board members and officials. The matters were not referred to the Federal Police in 2007, although they are now, while in 2011 it has been revealed that the RBA had to correct evidence given to Parliamentary committees.
Roles and responsibilities
Parliament
A parliament is a legislature, especially in those countries whose system of government is based on the Westminster system modeled after that of the United Kingdom. The name is derived from the French , the action of parler : a parlement is a discussion. The term came to mean a meeting at which...
. The Reserve Bank Board's duty stated in the Act, within its outlined boundaries, is to ensure that the Bank's monetary and banking policy is used to help the Australian population. This should be accomplished through consultation with the Government
Government of Australia
The Commonwealth of Australia is a federal constitutional monarchy under a parliamentary democracy. The Commonwealth of Australia was formed in 1901 as a result of an agreement among six self-governing British colonies, which became the six states...
and so in the Reserve Bank Board's opinion that its powers are used to help with:
In practice the Reserve Bank concentrates on the first objective
Open market operation
Open market operations is the buying and selling of government bonds on the open market by a central bank. It is the primary means of implementing monetary policy by a central bank. The usual aim of open market operations is to control the short term interest rate and the supply of base money in...
, that is to control inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
through monetary policy
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...
. The current objective is a policy of inflation targeting
Inflation targeting
Inflation targeting is an economic policy in which a central bank estimates and makes public a projected, or "target", inflation rate and then attempts to steer actual inflation towards the target through the use of interest rate changes and other monetary tools.Because interest rates and the...
aimed at maintaining the annual inflation rate at between "2-3 per cent, on average, over the cycle
Business cycle
The term business cycle refers to economy-wide fluctuations in production or economic activity over several months or years...
". This target was first set in 1993 by the then Reserve Bank Governor Bernie Fraser and was then formalised in 1996 by the then Treasurer
Treasurer of Australia
The Treasurer of Australia is the minister in the Government of Australia responsible for government expenditure and revenue raising. He is the head of the Department of the Treasury. The Treasurer plays a key role in the economic policy of the government...
Peter Costello
Peter Costello
Peter Howard Costello AC is an Australian politician and lawyer who served as the Treasurer in the Australian government from 1996 to 2007. He is the longest-serving Treasurer in Australian history. Costello was a Member of the Australian House of Representatives from 1990 to 2009, representing...
and incoming Reserve Bank Governor Ian Mcfarlane.
The Reserve Bank gives banking and registry
Registry
-Computing:* Windows Registry, a database of configuration settings in Microsoft Windows operating systems* Domain name registry, an organization that manages the registration of top-level internet domain names...
services to agencies of the Government, to other central banks, and other official institutions. The assets of the Bank include the gold and foreign exchange reserves of Australia, which is estimated to have a net worth
Net worth
In business, net worth is the total assets minus total outside liabilities of an individual or a company. For a company, this is called shareholders' preference and may be referred to as book value. Net worth is stated as at a particular year in time...
of A$101 billion.
Nearly 94% of the RBA's employees work at its headquarters in Sydney
Sydney
Sydney is the most populous city in Australia and the state capital of New South Wales. Sydney is located on Australia's south-east coast of the Tasman Sea. As of June 2010, the greater metropolitan area had an approximate population of 4.6 million people...
and at the Business Resumption Site. The remainder of the total 926 staff work in Adelaide
Adelaide
Adelaide is the capital city of South Australia and the fifth-largest city in Australia. Adelaide has an estimated population of more than 1.2 million...
, Brisbane
Brisbane
Brisbane is the capital and most populous city in the Australian state of Queensland and the third most populous city in Australia. Brisbane's metropolitan area has a population of over 2 million, and the South East Queensland urban conurbation, centred around Brisbane, encompasses a population of...
, Canberra
Canberra
Canberra is the capital city of Australia. With a population of over 345,000, it is Australia's largest inland city and the eighth-largest city overall. The city is located at the northern end of the Australian Capital Territory , south-west of Sydney, and north-east of Melbourne...
, Melbourne
Melbourne
Melbourne is the capital and most populous city in the state of Victoria, and the second most populous city in Australia. The Melbourne City Centre is the hub of the greater metropolitan area and the Census statistical division—of which "Melbourne" is the common name. As of June 2009, the greater...
, Perth
Perth, Western Australia
Perth is the capital and largest city of the Australian state of Western Australia and the fourth most populous city in Australia. The Perth metropolitan area has an estimated population of almost 1,700,000....
, London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
and New York
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
. A wholly owned subsidiary
Subsidiary
A subsidiary company, subsidiary, or daughter company is a company that is completely or partly owned and wholly controlled by another company that owns more than half of the subsidiary's stock. The subsidiary can be a company, corporation, or limited liability company. In some cases it is a...
of the bank is Note Printing Australia
Note Printing Australia
Note Printing Australia , which is located in Craigieburn, Melbourne, is a wholly owned subsidiary of the Reserve Bank of Australia and was corporatised in July 1998. NPA has its origins as a subsidiary of the Commonwealth Bank and was established in 1913 to print banknotes for Australia...
, which employs 257 other workers, and which manufactures the Australian dollar
Australian dollar
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...
and other securities, for markets both in and outside of Australia.
The Payments System Board fills the role of deciding on the Bank's payments system policy and the Reserve Bank Board is responsible for all other monetary and banking policies of the bank. Conflicts between the two Boards don't occur often and when they do, they are resolved by the Governor.
Reserve Bank Board
The Reserve Bank Board consists of nine members in total. These members include the three ex officio members of the Board, consisting of the Governor of the Reserve Bank, who is Chairman of the Board, the Deputy Governor of the Reserve Bank, who is the Deputy Chairman of the Board, and the Secretary to the Treasury.In addition, the Board is composed of six external members who are appointed by the Treasurer for a period of five years. According to section 17(1) of the Reserve Bank Act, members of the Board are not allowed to be a director, officer, or employee of an institution that is authorised to take in deposits. Excluding changes in the number of directors, the structure of the board of directors has remained unchanged since 1951.
| Name | Office (if applicable) | Term begins | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Ex officio members | |||||||||||||||||
| Glenn Stevens Glenn Stevens Glenn Robert Stevens is an Australian economist and the current Governor of the Reserve Bank of Australia.-Early life and education:... |
Chairman of the Board | 18 September 2006 | 17 September 2013 | ||||||||||||||
| Ric Battellino | Deputy Chairman of the Board | 14 February 2007 | 13 February 2012 | ||||||||||||||
| Martin Parkinson Martin Parkinson Dr Martin Lee Parkinson PSM is the current Secretary of the Department of the Treasury of Australia effective March 2011. He had previously worked as the inaugural Secretary of the Department of Climate Change, Deputy Treasury Secretary, an International Monetary Fund official, and an advisor to... |
Secretary to the Treasury | 7 March 2011 | ""Indefinte"" | ||||||||||||||
| External members | |||||||||||||||||
| Jillian Broadbent | – | 7 May 1998 | 6 May 2013 | ||||||||||||||
| Donald McGauchie Donald McGauchie Donald McGauchie in Sydney, Australia, is a member of the board of the Reserve Bank of Australia since 30 March 2001 and has recently been appointed chairman of the Nufarm board, and was the former chairman of Telstra Corporation. McGauchie began his duties as chairman on 20 July 2004, taking over... |
– | 30 March 2001 | 29 March 2011 | ||||||||||||||
| Warwick McKibbin Warwick McKibbin Warwick McKibbin is an Australian Professor of Economics at the Australian National University who works across a wide range of areas in applied policy... |
– | 31 July 2001 | 30 July 2011 | ||||||||||||||
| Roger Corbett Roger Corbett Roger Campbell Corbett AO is an Australian businessman. From January 1999 to September 2006, Corbett served as CEO of Woolworths Limited, a large retailing conglomerate. He is now a director of Wal-Mart, the Reserve Bank of Australia and Fairfax Media... |
– | 2 December 2005 | 1 December 2015 | ||||||||||||||
| Graham Kraehe | – | 14 February 2007 | 13 February 2012 | ||||||||||||||
| John Akehurst | – | 31 August 2007 | 30 August 2012 | ||||||||||||||
The board normally meets eleven times each year, on the first Tuesday of each month, with the exception of January which has no meeting. Every year, the Board meets at least once in Melbourne
Melbourne
Melbourne is the capital and most populous city in the state of Victoria, and the second most populous city in Australia. The Melbourne City Centre is the hub of the greater metropolitan area and the Census statistical division—of which "Melbourne" is the common name. As of June 2009, the greater...
, which is usually in the first six months of the year. The Board occasionally also meets in other Australian capitals. Five members of the Board must meet in order to form a meeting of the Board, which must be chaired by the Governor, or the Deputy Governor in his absence.
The Board usually forms a consensus without a need for structured voting on the issues at hand. Meetings of the Board are held in the Boardroom of the Reserve Bank's Head Office in Sydney
Sydney
Sydney is the most populous city in Australia and the state capital of New South Wales. Sydney is located on Australia's south-east coast of the Tasman Sea. As of June 2010, the greater metropolitan area had an approximate population of 4.6 million people...
or the equivalent in other Regional Offices of the Bank. The meetings begin at 9.00 am
12-hour clock
The 12-hour clock is a time conversion convention in which the 24 hours of the day are divided into two periods called ante meridiem and post meridiem...
and continue for three and a half hours, with a lunch at the end and perhaps a guest speaker. Minutes of the monetary policy
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...
Board meetings are published two weeks after the meeting is held.
Payments System Board and the ACCC
The Reserve Bank Act 1959 allows the Payments System Board to decide the Reserve Bank's payment systemPayment system
A payment system is a system used for transferring money. What makes it a "system" is that it employs cash-substitutes; traditional payment systems are negotiable instruments such as drafts and documentary credits such as letter of credits. With the advent of computers and electronic...
s policy. This is done so it can command risk and to aid in competitiveness and balance in the financial system. The Bank's power through the Payment Systems Act 1998 allows it to regulate
Regulation
Regulation is administrative legislation that constitutes or constrains rights and allocates responsibilities. It can be distinguished from primary legislation on the one hand and judge-made law on the other...
any payment system and can create binding rules for security and performance in the system. If members of a payment system are at odds over issues of market risk
Market risk
Market risk is the risk that the value of a portfolio, either an investment portfolio or a trading portfolio, will decrease due to the change in value of the market risk factors. The four standard market risk factors are stock prices, interest rates, foreign exchange rates, and commodity prices...
, admission, safety, and rivalry, the RBA can additionally administer arbitration
Arbitration
Arbitration, a form of alternative dispute resolution , is a legal technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons , by whose decision they agree to be bound...
with the consent of those involved. The Reserve Bank is also permitted to gather information from a payment system or participants thereof. The Bank was also given the power to regulate the competition of transactions
Clearing house (finance)
A clearing house is a financial institution that provides clearing and settlement services for financial and commodities derivatives and securities transactions...
in August 2001.
The Payment Systems and Netting Act 1998 gives the Board power in areas of the law that were previously uncertain. It removed the zero hour rule that allowed a court to date a bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
the previous midnight
Midnight
Midnight is the transition time period from one day to the next: the moment when the date changes. In the Roman time system, midnight was halfway between sunset and sunrise, varying according to the seasons....
and the Act made it so payments the same day could not be undone. Before the removal of the zero hour rule, the Real Time Gross Settlement
Real Time Gross Settlement
Real time gross settlement systems are funds transfer systems where transfer of money or securities takes place from one bank to another on a "real time" and on "gross" basis. Settlement in "real time" means payment transaction is not subjected to any waiting period. The transactions are settled...
system had been violated because payments in the system should inherently not be reverted. Some payments systems had previously agreed to pay and receive obligations to the whole system, rather than merely maintaining their own. But in the event of a bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
, the bankrupt institution did not pay what it owed back to the solvent parties, while they had to pay their dues to the failed bank. This was later changed, when cheques were deemed void
Void (law)
In law, void means of no legal effect. An action, document or transaction which is void is of no legal effect whatsoever: an absolute nullity - the law treats it as if it had never existed or happened....
if the bankrupt institution doesn't have the funds to back them up, after the Cheques Act 1986 was amended in 1998. The Trade Practices Act 1974 generally does not allow competitors to make cooperative agreements, but if The Australian Competition and Consumer Commission
Australian Competition and Consumer Commission
The Australian Competition and Consumer Commission is an independent authority of the Australia government. It was established in 1995 with the amalgamation of the Australian Trade Practices Commission and the Prices Surveillance Authority to administer the Trade Practices Act 1974...
(ACCC) is permitted to make exceptions for competitors making agreements among themselves. The ACCC and the Payments Systems Board are encouraged to work together regarding access and rivalry through the Payment Systems (Regulation) Act 1998.
Members of the Payment Systems Board are defined by Section 25A of the Reserve Bank Act 1959, with three of the members being ex officio or representatives of another organisation. The Governor of the Reserve Bank of Australia is the Chairman of the Payments System Board, there is one representative of the RBA, and there is one representative of the Australian Prudential Regulation Authority
Australian Prudential Regulation Authority
The Australian Prudential Regulation Authority is a statutory authority and the prudential regulator of the Australian financial services industry.-Regulatory scope:...
(APRA). In addition, there are up to five other members of the Board that are appointed by the Treasurer for a term up to five years in length. They meet once per quarter, with five members forming a quorum
Quorum
A quorum is the minimum number of members of a deliberative assembly necessary to conduct the business of that group...
, and one meeting per year is generally held in Melbourne, while the rest are held in Sydney. The Chairman is to meet with the Chairman of the ACCC at least once annually on issues of interest to both parties in the payments system, in addition to members of both organisations consulting over issues that are mutually important.
The current members of the Payments System Board are:
| Name | Office (if applicable) | Term begins | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Ex officio or representative members | |||||||||||||||||
| Glenn Stevens Glenn Stevens Glenn Robert Stevens is an Australian economist and the current Governor of the Reserve Bank of Australia.-Early life and education:... |
Chairman of the Board (RBA Gov.) | 18 September 2006 | 17 September 2013 | ||||||||||||||
| Malcolm Edey | Deputy Chairman of the Board (RBA Rep.) | 14 April 2009 | indefinite | ||||||||||||||
| John Laker | APRA Australian Prudential Regulation Authority The Australian Prudential Regulation Authority is a statutory authority and the prudential regulator of the Australian financial services industry.-Regulatory scope:... Representative |
24 July 1998 | indefinite | ||||||||||||||
| Other members | |||||||||||||||||
| Joe Gersh | – | 15 July 1998 | 14 July 2013 | ||||||||||||||
| Robert McLean | – | 29 November 2006 | 28 November 2011 | ||||||||||||||
| Brian Wilson | – | 15 November 2010 | 14 November 2015 | ||||||||||||||
| Catherine Walter | – | 3 September 2007 | 2 September 2012 | ||||||||||||||
Governors and their role
The Governor is required by the Reserve Bank Act 1959 to keep in contact with the Secretary
Department of the Treasury (Australia)
The Department of the Treasury is an Australian Government department. Its role is to focus and develop economic policy.-History:The Commonwealth Treasury was established in Melbourne in January 1901....
on matters concerning both the Treasury and Reserve Bank and vice versa. It is also mandated that the Board inform the Government of the Bank's monetary and banking policy, which is often accomplished through the Governor's meetings with the Treasurer. Since 1996, the Governor and other senior members of the Bank have appeared twice annually before the House of Representatives Standing Committee on Economics
Australian House of Representatives
The House of Representatives is one of the two houses of the Parliament of Australia; it is the lower house; the upper house is the Senate. Members of Parliament serve for terms of approximately three years....
to explain the conduct of the Bank. The Reserve Bank Governor is appointed to a term of up to seven years by the Treasurer and are eligible to be reappointed at the end of their term. The Governor is the Chairman of both the Payment Systems Board and the Reserve Bank Board and therefore resolves any disputes that occur between the two entities.
The longest serving Governor, if his service to both the Commonwealth Bank and the Reserve Bank of Australia are included, is H.C. Coombs, who served nineteen years and six months combined. He is regarded by some as one of the most committed anti-inflationists in government throughout the 1950s
1950s
The 1950s or The Fifties was the decade that began on January 1, 1950 and ended on December 31, 1959. The decade was the sixth decade of the 20th century...
and 60s
1960s
The 1960s was the decade that started on January 1, 1960, and ended on December 31, 1969. It was the seventh decade of the 20th century.The 1960s term also refers to an era more often called The Sixties, denoting the complex of inter-related cultural and political trends across the globe...
. The longest-serving Commonwealth Bank Governor is Sir Ernest Riddle
Ernest Riddle
Sir Ernest Cooper Riddle was an Australian banker and Governor of the Commonwealth Bank of Australia, then Australia's central bank, from 1927 to 1938.-Early life:...
, who served eleven years and four months, while the longest-serving Reserve Bank Governor is Ian Macfarlane
Ian Macfarlane (economist)
Ian John Macfarlane, AC , Australian economist, and Governor of the Reserve Bank of Australia , Australia's central bank, from 1996 to 17 September 2006...
, who served ten years. The shortest-serving Governor by many years is James Kell who served 2 years for the Commonwealth Bank.
Governors
| # | Governor | Start | End | Ref | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Governors of the Commonwealth Bank of Australia | |||||||||||||||||
| 1 | Sir Denison Miller Denison Miller Sir Denison Samuel King Miller KCMG, was the first governor of the Commonwealth Bank of Australia.-Early life:Miller was born at Fairy Meadow, near Wollongong, New South Wales, the son of Samuel King Miller, head teacher of the Deniliquin public school and his wife Sarah Isabella, née Jones where... KCMG* |
June 1912 | June 1923 | ||||||||||||||
| 2 | James Kell | October 1924 | October 1926 | ||||||||||||||
| 3 | Sir Ernest Riddle Ernest Riddle Sir Ernest Cooper Riddle was an Australian banker and Governor of the Commonwealth Bank of Australia, then Australia's central bank, from 1927 to 1938.-Early life:... |
October 1926 | February 1938 | ||||||||||||||
| 4 | Sir Henry Sheehan KBE* | February 1938 | March 1941 | ||||||||||||||
| 5 | Hugh Armitage CMG | July 1941 | December 1948 | ||||||||||||||
| 6 | H. C. Coombs H. C. Coombs Herbert Cole H.C. "Nugget" Coombs was an Australian economist and public servant.-Early years:Coombs was born in Kalamunda, Western Australia, Australia, one of six children of a country railway station-master and a well-read mother.Coombs's political and economic views were formed by the Great... |
January 1949 | January 1960 | ||||||||||||||
| Governors of the Reserve Bank of Australia | |||||||||||||||||
| 1 | H. C. Coombs H. C. Coombs Herbert Cole H.C. "Nugget" Coombs was an Australian economist and public servant.-Early years:Coombs was born in Kalamunda, Western Australia, Australia, one of six children of a country railway station-master and a well-read mother.Coombs's political and economic views were formed by the Great... |
January 1960 | July 1968 | ||||||||||||||
| 2 | Sir J. G. Phillips J. G. Phillips Sir John Grant Phillips KBE was an Australian economist who became the second Governor of the Reserve Bank of Australia, from 1968 to 1975. His name appeared on Australian currency notes as "J. G... |
July 1968 | July 1975 | ||||||||||||||
| 3 | Sir H. M. Knight | July 1975 | August 1982 | ||||||||||||||
| 4 | R. A. Johnston | August 1982 | July 1989 | ||||||||||||||
| 5 | Bernie Fraser | September 1989 | September 1996 | ||||||||||||||
| 6 | Ian Macfarlane Ian Macfarlane (economist) Ian John Macfarlane, AC , Australian economist, and Governor of the Reserve Bank of Australia , Australia's central bank, from 1996 to 17 September 2006... |
September 1996 | September 2006 | ||||||||||||||
| 7 | Glenn Stevens Glenn Stevens Glenn Robert Stevens is an Australian economist and the current Governor of the Reserve Bank of Australia.-Early life and education:... |
18 September 2006 | 17 September 2013 | ||||||||||||||