Our Role

The Reserve Bank of Australia (RBA) is Australia’s central bank. It conducts monetary policy, works to maintain a strong financial system and issues the nation’s banknotes. As well as being a policy-making body, the RBA provides selected banking and registry services to a range of Australian government agencies and to a number of overseas central banks and official institutions, and operates payment settlement services that are critical to the nation’s commerce. It also manages Australia’s gold and foreign exchange reserves.

The role and functions of the RBA are underpinned by various pieces of legislation. It is a statutory authority, established by an Act of Parliament, the Reserve Bank Act 1959, which gives it specific powers and obligations.

Under the Act, the RBA has three boards – the Monetary Policy Board, the Payments System Board and the Governance Board. Each of these boards performs their functions in a manner that achieves the RBA’s overarching objective, which is to promote the economic prosperity and welfare of the Australian people, both now and into the future (Section 8AA).

The functions of the Monetary Policy Board are set out in Section 9B of the Act. They include:

  1. Determining the monetary policy of the RBA, in a manner that it believes best contributes to both price stability and the maintenance of full employment in Australia. The Statement on the Conduct of Monetary Policy sets out the common understanding of the Board and the Government as to a framework by which the Board can achieve this.
  2. Determining the RBA’s policy for contributing to the stability of Australia’s financial system.

The functions of the Payments System Board are defined in Section 10B(1) of the Act. They include:

  1. determining the RBA’s payments system policy
  2. ensuring the powers of the RBA under the Payment Systems (Regulation) Act 1998 and the Payment Systems and Netting Act 1998 are exercised in a way that it believes best contributes to: (i) controlling risk in the financial system; (ii) promoting the efficiency of the payments system; and (iii) promoting competition in the market for payment services, consistent with the overall stability of the financial system
  3. ensuring that the RBA’s functions and powers under Part 7.3 and Part 7.3B of the Corporations Act 2001 are exercised in a way that, in the Board’s opinion, will best contribute to the overall stability of the financial system.

The functions of the Governance Board are defined in Section 10D(1). These include:

  1. overseeing and determining policies for the management and organisational affairs of the RBA
  2. determining the RBA’s policies for delivering banking services to the Commonwealth and issuing, re-issuing and cancelling Australian banknotes
  3. determining the RBA’s policies for any other matter not covered by the functions of the Monetary Policy Board or the Payments Policy Board.

Section 7A of the Act also establishes the Governance Board as the accountable authority of the RBA under the Public Governance, Performance and Accountability Act 2013. This role creates obligations on the Governance Board to establish frameworks and policies for, among other things, the proper use and management of the RBA’s resources and establishing and maintaining appropriate systems of risk oversight and risk management.

Each board is afforded substantial independence from the Government to set policies that, in their opinion, best promote the economic prosperity and welfare of the Australian people. However, Section 11A of the Act requires the Monetary Policy and Payments System boards to inform the Government, from time to time, about the performance of their functions and the exercise of their powers. Section 11 of the Act also sets out a process by which to resolve any differences of opinion between the RBA’s boards and the Australian Treasurer.