Reserve Bank of New Zealand

The Reserve Bank of New Zealand is New Zealand’s central bank and has three main functions: - operating monetary policy to maintain price stability - promoting the maintenance of a sound and efficient financial system, and - meeting the currency needs of the public.

At the most basic level, the Reserve Bank has the duty of ensuring that people can buy and sell goods and services using money, instead of having to barter. Cash is issued to the public by banks, which in turn buy their cash from the Reserve Bank. In addition, banks hold accounts with the Reserve Bank that they use to make payments to each other, on behalf of their customers.

As the agency that issues money, the Reserve Bank is required to ensure that money retains its buying power. In other words, the Reserve Bank must guard against inflation or deflation. Price stability protects the value of people’s incomes and savings, and encourages investment in the nation’s productive capacity, thereby contributing to employment, growth, export competitiveness and a more just society.

The Reserve Bank screens and registers banks, and supervises the banking system. It also oversees and operates in financial markets, with the objective of maintaining market stability and confidence. It manages the country’s foreign exchange reserves, offers registry and depository services, and provides the secretariat for the Overseas Investment Commission. When the Government wants to borrow in New Zealand dollars, the Reserve Bank raises the funds on behalf of the Treasury, by selling bonds and Treasury bills.