The Reserve Bank of New Zealand is the central bank of New Zealand and is constituted under the Reserve Bank of New Zealand Act 1989. The Governor of the Reserve Bank is responsible for New Zealand's currency and operating monetary policy. The Bank's current Governor is Dr. Alan Bollard. Employees of the bank operate under the framework of a managerial hierarchy.
The Reserve Bank of New Zealand does not offer financial services to the public nor does it offer deposit insurance, and its website refers people to other financial institutions.
Unlike the United States Federal Reserve, the Reserve Bank does not have elements of private ownership; according to its website, "The Reserve Bank does not have shareholders. It is 100% 'owned' by the New Zealand Government, with any extra revenue that the Reserve Bank makes going back into the Crown accounts. The National Bank is not a government department, but is a body corporate whose finances are included in the Crown accounts."
The Reserve Bank is responsible for independent management of monetary policy to maintain price stability. The degree of price stability is determined through a Policy Target Agreement with the Minister of Finance. Also, Policy Target Agreements are public documents and hence a government cannot secretly change the targets to gain a short term surge in economic growth.
The mechanism of this is the Official Cash Rate (a percentage) which affects short term interest rates. The Bank will provide cash overnight at 0.25% above the cash rate to Banks against good security with no limit. Furthermore the bank will accept deposits from financial institutions with interest at 0.25% less than the official cash rate.
Banks that offer loans at interest higher than the official cash rate will be undercut by Banks that offer cheaper loans, and banks that loan out lower than the official cash rate will make less compared to other banks which can simply deposit their money in the Reserve Bank with a higher rate of return. The Reserve Bank borrows and offers loans with no limit on volumes in order to ensure that the interest rate in the market remains at the Official Cash rate level.
Through controlling this, the Reserve Bank can then influence short term demand in the New Zealand Economy and use this to control prices.
Adjustments to the official cash rate are made eight times a year. It can make unscheduled adjustments but does not usually do so.
The Reserve Bank accepts all New Zealand currency for payment at face value. This applies to all demonetised or withdrawn currency, however such currency need not be accepted by money changers as it is no longer legal tender. All decimal notes are legal tender except $1 and $2 notes as these have been withdrawn. Damaged notes are still worth something so long as they are recognisable. The Reserve Bank website notes that as a rule of thumb if there is more than half a bank note they will pay its full value. To receive payment people have to turn in the note to either the Reserve Bank in Wellington or any bank.
All registered banks operating in New Zealand must issue a quarterly disclosure statement, and the Reserve Bank supervises these.
The purpose of these disclosure statements is to:
The summary comprises: