The Reserve Bank of Australia (RBA) plays a crucial role in the economic well-being of every Australian. As the nation’s central bank, the RBA is entrusted by the Australian Parliament to promote economic prosperity and welfare for all Australians, both today and in the years to come. This responsibility is multifaceted, encompassing the management of monetary policy, ensuring financial system stability, overseeing the nation’s banknotes, and facilitating efficient payment systems.
One of the most visible functions of the Reserve Bank is setting interest rates, a process known as monetary policy. By adjusting the cash rate – the interest rate at which banks lend to each other overnight – the RBA influences broader interest rates across the economy. These changes impact borrowing costs for individuals and businesses, returns on savings, exchange rates, and asset values like homes and shares. The primary goal of monetary policy is to maintain price stability, keeping inflation within a target range of 2–3 per cent on average, while simultaneously fostering full employment. Achieving these dual objectives is fundamental to a thriving Australian economy.
Beyond monetary policy, the Reserve Bank is also dedicated to maintaining the stability of Australia’s financial system. A stable financial system is characterized by its safety and ability to facilitate the smooth flow of money, even during periods of economic turbulence. The RBA contributes to this stability through its monetary policy settings and by collaborating closely with other key financial regulators, including the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investment Commission (ASIC), and the Australian Treasury, via the Council of Financial Regulators. This collaboration is essential for identifying and mitigating potential risks to the financial system. In extraordinary circumstances, the RBA can also provide liquidity support to sound financial institutions facing temporary difficulties.
The Reserve Bank is also responsible for the production and distribution of Australia’s banknotes. Australian banknotes are renowned for their high quality and security features. Australia pioneered the use of polymer banknote technology in the 1980s, a groundbreaking innovation developed by the Bank in partnership with the CSIRO (Commonwealth Scientific and Industrial Research Organisation). Despite the increasing prevalence of digital payments, banknotes remain in strong demand in Australia, particularly as a store of value. The RBA operates a state-of-the-art banknote printing facility and vault located in Melbourne.
Furthermore, the RBA plays a central role in operating Australia’s payment system. The Reserve Bank facilitates the interbank transfer of funds, ensuring that money moves seamlessly between different financial institutions when payments are made. The RBA is committed to fostering innovation in the payments landscape to provide Australians with efficient and secure payment options. A key example of this is the development of the New Payments Platform (NPP) in collaboration with the banking industry, which enables near real-time payments 24/7. The Bank continuously examines how the nature of money and payment systems may evolve with technological advancements.
In its capacity as the banker to the Australian Government, the Reserve Bank manages the government’s accounts. Transactions such as Medicare refunds, tax payments, and government support payments are processed through these accounts at the RBA. The Reserve Bank recognizes the importance of these payments to many Australians and is committed to ensuring they are delivered promptly and reliably, particularly during times of need, such as during natural disasters or economic crises.
Delivering on these diverse responsibilities requires extensive research, analysis, innovation, and operational support. The Reserve Bank employs over 1,500 people, primarily based in Sydney, with additional offices in Canberra, Brisbane, Melbourne, Adelaide, Perth, Beijing, London, and New York. As Australia’s central bank, the Reserve Bank of Australia is dedicated to serving the Australian people and diligently fulfilling its responsibilities to ensure the stability and prosperity of the Australian economy and “Australia Money” for future generations.
