Role Of Reserve Bank Of Australia

Role Of Reserve Bank Of Australia

The Reserve Bank is Australia’s central bank, and unlike commercial banks, RBA doesn’t provide bank accounts or loans to the public. RBA plays multi-facet role by executing multiple functions such as conducting monetary policy, issuing currency, maintaining stability in the financial system and promoting efficiency and competition in the payments system, providing banking services to the Australian Government, etc. This article shares the key functionality related to the role of Reserve Bank of Australia (RBA).

It is responsible for making and distributing Australia’s banknotes, and currently, around $73.6 Bn worth of banknotes are in circulation. These banknotes have cutting-edge security features which makes them some of the most secure currency in the world.

As commercial banks are the banks for the public, RBA is the bank for the government. Every year it processes over 300 Mn payments on behalf of government agencies.

Usually, people hear about RBA during monetary policy meeting, where the central bank makes a monthly decision about interest rates with the objective of preserving the stability of the money value over time because unstable money can’t be the foundation for a prosperous economy.

The Reserve bank is responsible for printing the $60 Bn worth brightly colored pieces of plastic (cards) floating around used for everyday transactions.

RBA runs the countries electronic payments system with a very high standard of reliability and efficiency where it clears and settles worth $180 Bn transactions every day between the banks.

In order to maintain compliance and operational efficiency across all the banks, RBA tries to foster stability through strict and periodic guidance and notices to all such banks.

It deals with tax-related obligations such as receiving refund cheques from the Tax Office, providing social security benefits, payments for pensions, payments from Medicare, etc. daily. RBA processes more than $200 Mn worth electronic payments every year.

The central bank takes care of Australia’s foreign exchange reserves (USD, Euros, Yen, Canadian dollars, Chinese RMB, etc.) which are currently around $40 Bn in the banks vault, these are assets for the nation which are utilized in case on a day when a situation arises where we need to have access to foreign funds.

Although, the headquartered of The Reserve Bank of Australia is situated in Sydney and it has a presence across all the state capitals on the mainland.

As per the RBA Annual Report 2017, it had a total number of 1369 of employees where women held 32 percent of management positions. It reported more than $1.5 Bn assistance for research and education. Its website was viewed and downloaded by 125 Mn visitors. Its twitter follower’s strength was around 35,000. In its 47 speeches, bank state offices gave nearly 50 presentations. The bank staff presented to 5,800 students and 400 educators across tertiary and secondary sectors. Average value of RITS transactions settled each day of around $176 Bn. There were approximately 1.5 Bn banknotes on the issue worth $73.6 Bn. The new $10 banknote entered circulation from 20 September 2017.

In a nutshell, RBA is responsible for monetary policy decisions, operations in financial markets, maintaining financial stability, payments, and financial markets infrastructure, printing and dispersing banknotes and providing smooth banking services. RBA meticulously ponders upon the financial parameters such as inflation, unemployment data, liquidity concerns for the smooth functioning of the economy and to achieve objectives such as price stability, economic prosperity, social security benefits, emergency payments and welfare of the Australian people. It manages and monitors risks while providing liquidity to financial institutions, through cooperation with other organizations under Council of Financial Regulators which is the coordinating body for financial regulators such as the Reserve Bank of Australia (RBA), the Australian Securities, the Australian Prudential Regulation Authority (APRA), and Investments Commission (ASIC) and the Australian Treasury.


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