Reserve Bank of New Zealand (RBNZ)
The Reserve Bank of New Zealand was established in 1934. It is wholly owned by the government of New Zealand. Headquartered in Wellington, New Zealand, the Reserve Bank of New Zealand is unique in the sense that it is the only central bank of the major central banks where decision making in monetary policy is the sole responsibility of the Governor. The current Governor is Graeme Wheeler.
Structure of the RBNZ
The RBNZ has a Board of Directors which exerts oversight on the activities of the Governor and also audits the RBNZ’s finances. The board has seven members.
Functions of the RBNZ
One of the functions of the RBNZ is the control of money supply in New Zealand. It issues the legal tender and coins of New Zealand, as well as controls the production, distribution and supply of the currency of New Zealand. The bank also replaces worn and damaged bank notes. Citizens can go to the RBNZ office to exchange their damaged bank notes if more than half the note is intact. The RBNZ also exerts control on monetary policy. This is at the sole discretion of the Governor, who is supervised by the Board. The RBNZ also maintains price stability through the Official Cash Rate, which in turn affects interest rates in New Zealand. The Official Cash Rate is a kind of interest rate which has a stabilizing mechanism on the inflationary levels and the lending rate of commercial banks in New Zealand.
Another very important of the Reserve Bank of New Zealand is to maintain the stability of the banking system. It does this by supervising banks and conducting tests on banks to determine their state of health.