Reserve Bank of Australia Annual Report – 1987 Branch Activities and Services

The Bank has offices in the capital city of each Australian state and territory and in London and New York. Australian branch offices provide a range of financial services for governments and other customers and cash services for banks. They also play a valuable role in continuing liaison with the financial and business communities; the role of the Melbourne office is of particular importance in this regard. Note Printing Branch at Craigieburn in Victoria prints Australian currency notes and some other security documents.

The increased integration of Australia with international financial processes has added to the importance of the Bank's overseas offices. They maintain contact with other central banks, international institutions and monetary authorities; are a continuing point of contact with overseas financial markets; and monitor economic and financial developments in North America and Europe. They assist in the investment and management of the Bank's holdings of foreign currency reserves and with the prudential supervision of Australian banks' overseas operations. London branch provides banking services in the United Kingdom for the Commonwealth Government and some state governments and authorities.

Customer services

The Bank is the principal banker for the Commonwealth Government, the governments of Queensland, Western Australia, South Australia and Tasmania and a number of statutory authorities. Other customers include banks, authorised dealers in the short-term money market, overseas central banks and international financial institutions.

The Bank has sought to keep abreast of developments in banking technology, and has continued to upgrade the banking services provided to its customers. During 1986/87, this covered, in particular, rapid availability of a wider range of information about their banking transactions. A new development of the past year was the making of gold loans to Perth Mint to facilitate the manufacture and issue of Australia's “Gold Nugget” coins.

Rural Credits Department

The decision to phase out the operations of the Rural Credits Department was announced in April 1986. The process is now well under way.

During 1986/87, existing customers were provided with access to funds from the Department for one final commodity season. Total loan limits approved in 1986/87 under this facility were $248 million; the final loan was approved in March 1987; repayments on all loans outstanding are expected in early 1988. Advances made in 1986/87 were mainly for dairy products, canned fruit, superphosphate and ginger. Interest rates on advances moved in line with market rates throughout the year.

Note printing

In 1986/87, Note Printing Branch produced 450 million pieces of Australian currency notes, 22 million pieces of currency notes for other countries and 9 million pieces of other security documents.

The present series of Australian notes dates from the introduction of decimal currency in 1966, when $1, $2, $10 and $20 notes were first issued. Subsequently, $5, $50 and $100 notes have been added to this series and the $1 note has been withdrawn although around 40 million remain on issue. The Treasurer announced in March 1987 that a $2 coin will be introduced in 1988. The $2 note will then be progressively withdrawn.

The Bank plans to issue a special commemorative note in 1988. It is possible that this note will be printed on a polymer-based substrate, developed in Australia jointly by the Commonwealth Scientific and Industrial Research Organisation and the Bank, and will incorporate a number of technological advances in note printing, designed to enhance the security of the currency. The introduction of a series of notes based on the new technology is also under consideration.

Note issue and cash operations

The Bank issues currency notes in bulk to banks and accepts the return of their surpluses and notes which are no longer fit to remain in circulation. Over the year ended 30 June 1987, the Bank issued $32.1 billion in notes and received $31.2 billion back from banks.

Notes returned to the Bank are processed through high speed currency verification, counting and sorting (CVCS) machines. By sorting notes according to standard of fitness, these machines have made it easier for the Bank to withdraw notes no longer suitable for circulation. They also assist with the detection of counterfeit notes.

The value of notes on issue totalled $9,742 million at end June 1987, some $827 million higher than a year earlier. Almost 90 per cent of the increase was accounted for by a rise in $100 notes on issue.

Coin is produced by the Royal Australian Mint with the Bank acting as the bulk distributor. The Bank also takes in and re-issues existing coin. During the year it issued to banks $545 million in coins of all denominations and received $517 million from them.

Government securities

The Bank advises the Commonwealth Government on aspects of debt management and manages domestic loan raising and debt servicing operations for the Government.

18 VALUE OF NOTES ON ISSUE

Registries of Commonwealth Government Inscribed Stock are conducted by the Bank at each Australian branch. The Registries accept and process applications, maintain the register of owners of stock and attend to the payment of interest and redemption of securities. At end June 1987, Commonwealth Government securities on issue at all Australian Registries totalled $51 billion.

The Registries also provide facilities for the transfer and exchange of Commonwealth Government securities. The secondary market for Treasury bonds continued to grow rapidly in 1986/87. Annual turnover increased by 70 per cent in 1986/87 after increasing by 40 per cent in the previous year. The market for Treasury notes was also active during the year. Holdings of notes in the private sector almost doubled to around $7 billion in 1986/87; there was a sharp rise in notes held by banks.

Following a review of procedures and systems a number of changes designed to improve service to the public were made during the year to the legislation under which Registries operate.

The Bank provides rediscount facilities for Treasury notes due to mature within 90 days. The rate at which the Bank will rediscount Treasury notes is announced daily. Small parcels of bonds may be sold to the Bank at market-related prices. There is a daily maximum of $25,000 per series per seller on these transactions, for which the Bank charges a small service fee.

Services

Information services

The Bank provides a wide range of data and other information through press releases and electronic transmission services. Much of this relates to regular economic and financial material; it also covers details of new policies and other matters of public interest.

The Bank's monthly Bulletin provides comprehensive data on regular financial and economic topics. Also included are articles on economic conditions, regular reporting on the Bank's operations in financial markets, topics of special interest and addresses by the Bank's senior officers. The Bulletin is an important source of commentary on changes in monetary policy and procedures between the publication of Annual Reports. In 1986/87, a monthly Bulletin Brief was introduced containing summaries of articles appearing in the Bulletin.

The Bank's Press Office handles the release of information and deals with a wide range of press and public enquiries.

Community relations

The Bank attaches high importance to promoting community understanding of its role and functions. Bank staff, on request, address professional and community groups, student bodies and teachers on economic and financial topics and on the various areas of the Bank's operations. School and other groups visit branch offices from time to time and Note Printing Branch caters for a large number of visitors during the year. A permanent exhibition of Australia's currency notes and printing equipment is scheduled to be opened at the Branch during 1988. The Bank has been a supporter of “Business in the Community” — a program established at Rotary Club initiative to provide assistance and advice to small businesses. During 1986/87, an officer was seconded to it to help develop the program in New South Wales.

Research grants

During the year, the Bank approved 90 grants from the Rural Credits Development Fund for a wide range of research projects for the promotion of primary production. Fellowships were also offered to senior researchers from Denmark and the United States to undertake studies in Australia. The total value of these grants and fellowships was $3.3 million. These funds were provided from the net profits of the Rural Credits Department.

Funding of the Rural Credits Development Fund will come to an end when the Department ceases operations. The funds to be allocated in November 1987 are expected to be the last substantial allocation, bringing to an end arrangements which began in 1925. Since then, the Fund has provided $34 million for the promotion of research into primary production in Australia. An advisory panel assists in the selection of projects to be supported by the Fund. Over the years, a number of eminent Australian scientists have been members of the panel and the Board wishes to record its appreciation of their valuable contribution.

During the year, grants totalling $26,000 were approved from the Economic and Financial Research Fund for research projects on topics within the Bank's general sphere of interest. Apart from these, the Fund is financing the preparation of a volume of biographies of major Australian financiers over the past 200 years, due for publication during 1988.

Freedom of Information

Twenty one requests for access to documents under the Freedom of Information Act were received during the year, compared with sixteen in 1985/86. All but three of the requests in 1986/87 were from staff or former staff.

Fourteen of the requests were granted in full and two were granted in part. Two requests and the balance of the two granted in part were transferred to another agency. In three requests access was not given as the documents requested were exempt.

The cost to the Bank of administering the Act in 1986/87, including staff and overheads, is estimated to have been approximately $9,200.