Reserve Bank Act Review
The aim of the Review
Updating and modernising the Reserve Bank of New Zealand Act 1989 (the Act) is an important step towards ensuring we can fulfil our role as kaitiaki | guardians of the financial system, promoting the prosperity and economic wellbeing of all New Zealanders.
What’s happened so far
1. Phase 1 of the Review (monetary policy)
The first phase of the Review focused on monetary policy and was completed in 2018. It resulted in a range of changes being made to New Zealand’s monetary policy framework in 2019 including:
- amending the objective of monetary policy to require us to consider maximum sustainable employment alongside price stability when making decisions on monetary policy
- establishing a monetary policy committee which includes external representation
- adding greater transparency, accountability and rigour to decision-making, with a formal remit, charter and code of conduct in our monetary policy framework.
2. Phase 2 of the Review
Phase 2 has been a wide-ranging review of our governance arrangements and funding model. It also included the Act's financial policy provisions and our role as regulator of the deposit-taking sector.
Following public consultation, the Government has decided to replace the Act with 2 new pieces of legislation:
The Reserve Bank of New Zealand Act 2021: this sets out our high-level objectives, functions, powers, accountability and governance arrangements, and funding model.
A Deposit Takers Act which will create a single, regulatory regime for all bank and non-bank deposit takers (such as building societies and finance companies). It would also establish a deposit insurance scheme to protect New Zealanders’ money held by licensed deposit takers.
- New Deposit Takers Act a step closer
- Introduction of Bill marks exciting new phase for Te Putea Matua
- The Reserve Bank embraces the future
- First consultation paper released for phase 2 of Reserve Bank Act review
RBNZ Act Timeline
2017 Review of the RBNZ Act 1989 announced
- Phase 1 Monetary Policy
- Phase 2 Financial policy, governance and funding arrangements
2018 Phase 1 of Review completed
- Phase 2 of review begins: Financial policy, governance and funding model
- Some provisions split off into proposed Deposit Takers Act
Consultation on Bill content begins
2019 RBNZ Monetary Policy Amendment Act
Monetary Policy Amendment Act establishes MPC and new maximum sustainable employment objective
- Consultation on the Bill content ends
- Drafting of the Bill commences
2021 RBNZ Bill
RBNZ Bill introduced into Parliament
First reading in Parliament
Review of public submissions by FEC
- FEC recommends any amendments to Cabinet
- Second reading in Parliament
- Committee of the whole House
- Third reading in Parliament
- Royal Assent – Bill becomes RBNZ Act 2021
RBNZ Act 2022
RBNZ Act Implemented