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| Reserve Bank of Australia |
The Reserve Bank of Australia came into being on 14 January 1960 as Australia's central bank and banknote issuing authority, when the Reserve Bank Act 1959 removed the central banking functions from the Commonwealth Bank to it. The Bank has the responsibility of providing services to the Government of Australia in addition to also providing services to other central banks and official institutions. It currently consists of the Payments System Board, which governs the payments system policy of the Bank, and the Reserve Bank Board, which governs all other monetary and banking policies of the bank.
Both Boards consist of members of both the Bank, the Treasury, other Australian government agencies, and leaders of other institutions that are part of the economy. The structure of the Reserve Bank Board has remained consistent ever since 1951, with the exception of the change in the number of members of the Board. The Governor of the Reserve Bank of Australia is appointed by the Treasurer and chairs both the Payment Systems and Reserve Bank Boards and when there are disagreements between both Boards, the Governor resolves them.
From the middle of the 19th century into the 1890s, the prospects of a national bank forming grew. In 1911, the Commonwealth Bank was established, but did not have the authority to print notes, which was a power that was still reserved to the Treasury. A movement toward reestablishing the gold standard occurred after World War I, with John Garvan leading various boards in contracting the money supply on the route to doing so, and the gold standard was instituted for both the British pound sterling and the Australian pound in 1925.
During the Great Depression, the Australian pound became devalued, no longer worth the pound sterling, and formally departed from the gold standard with the Commonwealth Bank Act of 1932. Legislation in 1945 led to regulation of private banks which H.C. Coombs was opposed to, and when he became Governor in 1949, he gave them more overall control over their institutions. When the monetary authorities implemented the advice of Coombs to have a flexible interest rate, it allowed the Bank to rely more on open market operations.
The float of the Australian dollar happened in 1983, around the same period of time that the financial system in Australia was deregulated. Administration of the banks was transferred in 1998 from the Bank to the Australian Prudential Regulation Authority and the Payments System Board was created, while the Bank was given power within the said Board in the same year. The current Governor of the Reserve Bank is Glenn Stevens, who has been the incumbent since 18 September 2006.
The Reserve Bank Board consists of nine members in total. These members include the three ex officio members of the Board, consisting of the Governor of the Reserve Bank, who is Chairman of the Board, the Deputy Governor of the Reserve Bank, who is the Deputy Chairman of the Board, and the Secretary to the Treasury.
In addition, the Board is composed of six external members who are appointed by the Treasurer for a period of five years. According to section 17(1) of the Reserve Bank Act, members of the Board are not allowed to be a director, officer, or employee of an institution that is authorised to take in deposits. Excluding changes in the number of directors, the structure of the board of directors has remained unchanged since 1951.
The board normally meets eleven times each year, on the first Tuesday of each month, with the exception of January which has no meeting. Every year, the Board meets at least once in Melbourne, which is usually in the first six months of the year. The Board occasionally also meets in other Australian capitals. Five members of the Board must meet in order to form a meeting of the Board, which must be chaired by the Governor, or the Deputy Governor in his absence.
The Board usually forms a consensus without a need for structured voting on the issues at hand. Meetings of the Board are held in the Boardroom of the Reserve Bank's Head Office in Sydney or the equivalent in other Regional Offices of the Bank. The meetings begin at 9.00 am and continue for three and a half hours, with a small lunch at the end and perhaps a guest speaker. Minutes of the monetary policy Board meetings are published two weeks after the meeting is held.