The Reserve Bank of Australia (RBA) is Australia's central bank and banknote issuing authority. It has had this role since 14 January 1960, when the Reserve Bank Act 1959 removed the central banking functions from the Commonwealth Bank.
The Bank's duty is to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people. It does this by conducting monetary policy to meet agreed inflation and full employment objectives, working to maintain a strong financial system and efficient payments system, and issuing the nation's banknotes.
The RBA also provides services to the Government of Australia and services to other central banks and official institutions. The RBA currently comprises the Payments System Board, which sets the payment system policy of the bank, and the Reserve Bank Board, which sets all other monetary and banking policies of the bank.
Both boards consist of members of the bank, the Treasury, other Australian government agencies, and leaders of other institutions that are part of the Australian 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.
Roles and responsibilities The Reserve Bank is currently governed by the Reserve Bank Act 1959.
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 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 Reserve Bank manages Australia's gold and foreign exchange reserves.
Nearly 94% of the RBA's employees work at its headquarters and at the Business Resumption Site, both in Sydney. The remainder of the total of 926 staff work in Adelaide, Brisbane, Canberra, Melbourne, Perth, London and New York City. 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 do not occur often, and when they do, they are resolved by the governor.
Governors and their roles The Governor is the most senior official of the RBA. The position is appointed by the Treasurer for a term of up to seven years and may be renewed. The Governor chairs both the Reserve Bank Board and the Payments System Board and resolves any disputes between them.
The governor of the Commonwealth 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 stated the governor's responsibilities of managing the CBA. In 1951, legislation established a 10-member board of which the CBA governor was a member. The CBA has maintained a similar structure since 1951.
The RBA governor is required by the Reserve Bank Act 1959 to keep in contact with the Treasury on matters concerning both the Treasury and Reserve Bank and vice versa. It also mandates that the RBA 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 RBA have appeared twice annually before the House of Representatives Standing Committee on Economics to explain the conduct of the bank.
List of Governors *Died in office
# Governor Post-nominals Start End RefGovernors of the Commonwealth Bank of Australia 1Denison Miller June 1912 June 1923 2 James Kell October 1924 October 1926 3 Sir Ernest Riddle October 1926 February 19384Sir Henry Sheehan February 1938 March 1941 5 Hugh Armitage July 1941 December 1948 6 H. C. Coombs January 1949 January 1960Governors of the Reserve Bank of Australia 1 H. C. Coombs January 1960 July 1968 2 Sir J. G. Phillips July 1968 July 1975'Bank Knight and Wife Found Dead', The Daily Telegraph, 9 October 1986. 3 Sir H. M. Knight July 1975 August 1982 4 Bob Johnston August 1982 July 1989 5 Bernie Fraser September 1989 September 1996 6 Ian Macfarlane September 1996 September 2006 7 Glenn Stevens 18 September 2006 17 September 2016 8 Philip Lowe 18 September 2016 17 September 2023 9 Michele Bullock 18 September 2023 –
The longest-serving governor, if his periods of 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 1960s. 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 two years for the Commonwealth Bank.
In July 2023, the RBA, along with the Treasurer, Jim Chalmers, announced the appointment of Michele Bullock as its new Governor, taking up the role in September 2023. This made Bullock the RBA's first female Governor.
Monetary Policy Board
The Reserve Bank's Monetary Policy Board consists of nine members: three ex officio members - the Governor (Chair), the Deputy Governor (Deputy Chair), and the Secretary to the Treasury, and six external members appointed by the Treasurer.
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 members, the structure of the board has remained unchanged since 1951.
The current members of the board are:
Name Office (if applicable) Term begins Term endsEx officio members Michele Bullock Governor of the Reserve Bank (chair) 18 September 2023 17 September 2030 Andrew Hauser Deputy Governor of the Reserve Bank (deputy chair) 12 February 2024 Jenny Wilkinson Secretary to the Treasury 16 June 2025 IndefiniteExternal members Ian Harper – 1 March 2025 31 August 2026 Carolyn Hewson – 1 March 2025 28 February 2027 Iain Ross – 1 March 2025 31 August 2028 Marnie Baker – 1 March 2025 28 February 2030 Renée Fry-McKibbin – 1 March 2025 28 February 2030 Bruce Preston – 1 March 2026 28 February 2031
The board normally meets eight times each year, beginning on a Monday afternoon and concluding on Tuesday. Board meetings are usually held at the Reserve Bank's Head Office in Sydney. Five members of the board must meet in order to constitute a quorum, and the meeting must be chaired by the governor, or the deputy governor in their absence.
Starting from 2025, the RBA adjusted its monetary policy meeting schedule from 11 to 8 meetings per year. The Monetary Policy Board now meets in the months of: February, March, May, July, August, September, November, and December. This change aligns the RBA's practices with other central banks and allows for more comprehensive assessments of economic conditions.
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 a similar facility in one of the bank's State Offices when meetings are held interstate (a secure location is used in Australian cities where the bank does not have its own premises).
Payments System Board and Australian Competition & Consumer Commission The Reserve Bank Act 1959 authorises the Payments System Board to decide the Reserve Bank's payments system policy. This is done so it can control risk, promote efficiency 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 RBA is also permitted to gather information from a payment system or participants thereof. The bank can also regulate the competition of transactions since 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 bankruptcy 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 reversed. 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 does not 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 the Australian Competition & 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 Payments System 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 Chair 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 who are appointed by the Treasurer for a term of up to five years. The board meet once per quarter, usually in Sydney with five members forming a quorum, which must be chaired by the Governor or, in their absence, the Deputy Chair. The Chair of the RBA meets with the Chair 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 Term endsEx officio or representative members Michele Bullock Governor of the Reserve Bank (chair) 18 September 2016 17 September 2023 Brad Jones Deputy Governor of the Reserve Bank (deputy chair) 16 January 2024 16 January 2029 John Lonsdale APRA representative 1 November 2022 IndefiniteExternal members Ross P. Buckley – 1 August 2023 31 July 2028 Gina Cass-Gottlieb 15 July 2013 31 July 2028 Michelle Deaker 1 August 2023 31 July 2028 Scott Farrell 23 March 2022 22 March 2027 Deborah Ralston 15 December 2016 14 December 2026
History