Reserve Bank of New Zealand Act 2021
The Reserve Bank of New Zealand Act 2021 is our foundational legislation setting our purpose, objectives and functions as the central bank of Aotearoa.
Embracing Te Aka Matua - our new Reserve Bank Act
The Reserve Bank of New Zealand Act 2021 came into effect on 1 July 2022, replacing the previous RBNZ Act 1989.
We describe our our new Act as Te Aka Matua, the primary roots of Tāne Māhuta, the financial system of Aotearoa. As the people of Te Pūtea Matua we are kaitiaki to Tāne protecting and nurturing its stability.
Te Aka Matua is at the core of Ngā Pūtake - the root system of Tāne. It anchors us deep into the ground, as the primary legislation giving us the power to act as New Zealand’s central bank.
Why we needed a new Act
Our previous legislation, the Reserve Bank of New Zealand Act 1989, was more than 30 years old.
By renewing Te Aka Matua the Reserve Bank Act 2021 and strengthening Ngā Pūtake — our roots — we ensure we continue to evolve into a modern, agile and transparent central bank working to enable all New Zealanders' future prosperity and economic wellbeing.
What’s changed under the RBNZ Act 2021
The renewal of Te Aka Matua has fundamentally changed how the Reserve Bank - Te Pūtea Matua operates and is governed.
- We are now overseen by an independently-appointed governing board responsible for all decision-making (except decisions made by the Monetary Policy Committee). The Reserve Bank Governor is a member of the Board as well as Chief Executive.
- Te Tai Ōhanga - The Treasury now acts as our external monitor and we report to them quarterly on our progress.
- Our work must take account of a new Financial Policy Remit issued by the Minister of Finance.
- We are increasing our transparency through the publication of an annual Statement of Performance Expectations and a Statement of Financial Risk Management.
- We are also establishing a new Foreign Reserves Coordination Framework (by the end of 2022) to provide more transparency about how we manage and use foreign reserves.
The RBNZ Act 2021 helps enable the coordination of all agencies responsible for regulating our financial system by legislatively mandating the role of the Council of Financial Regulators – Kaunihera Kaiwhakarite Ahumoni.
The Act also gives Te Pūtea Matua a new overarching financial policy objective of ‘protecting and promoting the stability of New Zealand’s financial system’ replacing our previous objective relating to a sound and efficient financial system*.
*References to soundness and efficiency remain in the Banking (Prudential Supervision) Act 1989. which along with the Non-bank Deposit Takers Act 2013 will eventually replaced by the forthcoming Deposit Takers Act currently in progress.