What we do - the Bank and its functions

The Reserve Bank is required to ensure that, throughout the economy, money works as well as possible as a mechanism for making transactions, storing value, and keeping account. The Bank also aims to keep employment near its maximum sustainable level and promotes a sound and efficient financial system. To fulfil these functions, the Bank carries out a wide range of tasks, from operating monetary policy to monitoring and supervising the health of the financial system, maintaining foreign reserves, operating in the financial markets if necessary, and issuing currency as required. To do this, we have defined the vision and values by which we operate.

About the Reserve Bank
What we do
What we do
In this video we explain our purpose and the mahi we do on behalf of all New Zealanders.
Past, present, future: the Reserve Bank
Past, present, future: the Reserve Bank
An introduction to the history and role of the Reserve Bank of New Zealand as revealed in the displays in the Reserve Bank Museum & Education Centre, Wellington, New Zealand.
Global forces
Global forces: Is New Zealand's economy safe from global shocks?
In this video we explore how global economic shocks impact New Zealand and how the Reserve Bank predicts and prepares for them.
Keeping the Banks healthy
Keeping banks healthy: How do we monitor the health of banks
In this video we explain how the Reserve Bank monitors banks, ensuring they aren't over-exposed to risky debt, so they can stay strong and healthy.
Responsibility and accountability
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The Reserve Bank is required under the Reserve Bank of New Zealand Act 1989 (ss 163-165) to provide an Annual Report, an annual accountability document, to the Minister of Finance no later than 3 months after the end of the financial year. The Annual Report contains a signed statement from the Governor, as well as the Board’s assessment of the performance of the Bank’s functions and the exercise of its powers. It also contains a summary of key activities, and presentation of the Bank’s financial statements.
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Amendments to New Zealand’s monetary policy framework came into effect on 1st April 2019. The remit, charter and code of conduct are key components of the new framework. The remit provides the Monetary Policy Committee (MPC) with its operational objectives, consistent with the economic objectives in Section 8 of the Reserve Bank of New Zealand Act (1989). The MPC will also be bound by the MPC charter and code of conduct. The charter provides directions on decision making procedures, transparency and accountability. The code of conduct sets out minimum standards of ethical and professional conduct that must be adhered to by members of the MPC.
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The Reserve Bank is required under the Reserve Bank Act (section 162A) to provide a Statement of Intent (SOI) to the Minister of Finance before the start of each financial year. The SOI sets out the objectives for the next three years and the budget for the first year of that period. The SOI also details the Bank’s strategic priorities for the next financial year.
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The Reserve Bank's Funding Agreement is a five yearly agreement between the Governor and the Minister of Finance that specifies how much of the Bank's revenues can be retained by the Bank to meet its operating costs, with the remainder going to the Government.
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These papers have been prepared to brief the incoming Minister of Finance on the role and functions of the Reserve Bank of New Zealand. The papers are also intended to be a useful briefing for other interested parties.
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Letter from the Minister of Finance to the Governor of the Reserve Bank outlining broad expectations of the Bank's relationship with the Minister and areas of particular interest for the year.
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The Reserve Bank is at times a party to Memoranda of Understanding with other organisations, which establish the principles governing how it will work together with those parties.
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As part of the Bank’s strategic priority to broaden its engagement with its stakeholders, the Reserve Bank is establishing a glossary of Te Reo Māori financial terms. These terms will be incorporated into future documentation and used to expand engagement with its iwi and Māori business stakeholders on key economic and financial issues.

Click below or on the diagram for further information about how these functions are carried out, and about the structure and services of the Reserve Bank.

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Reserve Bank of New Zealand Interactive Infographic Level 14 Level 13 Level 11 Level 9 Level 7 Level 5 Level 3 Level 1

The Reserve Bank operates a small museum, as a public education resource, which includes a significant range of exhibits, including the only operating example in the Southern Hemisphere of a water-based MONIAC economic computer.

Learn more: http://www.rbnzmuseum.govt.nz/

Teams within the Bank provide support services, including Communications, Financial Services, Human Resources, Digital Services, and Risk & Audit Assurance.

The Reserve Bank oversees and operates New Zealand’s wholesale payment and settlement systems – the Exchange Settlement Account System (ESAS) and the NZClear New Zealand system, which the registered banks use to complete transactions with each other.

Learn more: Markets & payments
Learn more about financial markets infrastructure oversight: Financial markets infrastructure oversight

The Reserve Bank formulates and implements monetary policy to achieve price stability. This is defined and specified by Monetary Policy Framework, which currently requires the Bank to keep CPI inflation between 1-3 percent, on average, over the medium term, with a focus on the mid-point of 2 percent and keep employment at near maximum sustainable employment.

Learn more: Monetary policy

The Governor of the Reserve Bank is accountable to the government for the Bank’s performance, but in most areas has statutory independence as to how outcomes are achieved. A Board of Directors is appointed by the government, but is not a decision-making body. The Bank employs approximately 260 staff and operates from The Terrace in Wellington, and a small office in Auckland.

Learn more: About Us

The Reserve Bank holds and manages New Zealand’s foreign exchange reserves. The Bank also operates in New Zealand’s domestic markets to implement its monetary policy objective and provide liquidity to the banking system.

Learn more: Markets & payments

Learn more: Domestic markets

In order to help maintain a sound and efficient financial system, the Reserve Bank registers and monitors banks and requires them to meet certain criteria. The Reserve Bank also regulates non-bank deposit-takers and insurance companies.

Learn more: Financial stability
Learn more about non-bank deposit taking oversight:Non-bank deposit takers
Learn more about insurance sector oversight: Insurers

The Reserve Bank is the only organisation authorised to issue currency for New Zealand. Banks buy currency in wholesale amounts from the Reserve Bank at face value and return it to the Reserve Bank for replacement. Notes are inspected by the Reserve Bank for quality and to detect any forgeries.

Learn more: Notes & coins

Notes on the diagram

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