History Reserve Bank of Australia

prime minister andrew fisher, government created commercial bank owned government, not central bank.

the proposition of national bank in australia began raised in middle of 19th century. interest accelerated in 1890s due austere collapse of financial , banking sectors @ beginning of decade. australian labor party consequently formed during same decade , proposed bank should formed, protected , cheap way of having financial services. party designed platform in 1908 commonwealth bank , combination of both commercial , central bank.

regardless, fisher s labor government introduced legislation in 1911 government-owned commercial bank, without complete central banking component. stated time , experience show how functions usefulness may extended [towards central banking]. function @ time made bank characteristic of central 1 was banker australian government, in addition being same states. time being, treasury of australia maintained role of issuing bank notes through notes act of 1910.

the commonwealth bank of australia gradually developed central bank of australia. in response disruption of trade during world war (1914–1918) commonwealth bank began manage debt of australian government. nevertheless, @ end of war, bank continued have primary role savings , trading bank. world war had caused currency of australia move away gold standard, in order fund great increase of government spending, did united kingdom , other parts of british empire.

anb board member john garvan led movement toward reestablishing gold standard.

the value of australian pound remained tied pound sterling. inflation in australia increased, less in britain, more in united states. case central bank increased need government cut spending after war reduce debt. commonwealth bank governor denison miller had been arguing issue of australian currency switched treasury bank, had more staff , more monetary knowledge.

the australian notes board (anb) created in 1920 , partially acceded request of miller, in having 4 directors, governor of bank being ex officio member. anb began follow policy of board member john garvan, in contracting money supply, goal of reducing prices free convertibility of australian pound gold re-established @ pre-war rates, return former gold standard.

this accomplished refusing exchange of notes gold , hoped lower domestic prices , raise exchange rate australian pound. when gold arrived new york, u.s. government sold securities in order diminish effect of monetary expansion, therefore executing first open market operations in history of australia , first attempt of central banking.

1924–present

the department of treasury issued notes until 1924, when responsibility transferred commonwealth bank. anb abolished commonwealth bank act 1924, due treasurer , country party leader earle page wanting end monetary contraction particularly hurt farming constituents, result receiving reduced export prices. new board of directors replacing it, composed of various areas of industry, appointed garvan chairman, , continued policies. in 1925, both pound sterling , australian pound returned pre-war gold standard. primary role of commonwealth bank continued savings , trading bank, though government attempted make bank central bank through actions in 1924.

legislation introduced parliament @ climax of great depression, in may 1930, treasurer e.g. theodore, transfer central banking powers commonwealth bank new central bank, failed. australian pound devalued in 1931 , ceased tied pound sterling. reserve bank departed gold standard commonwealth bank act 1932, made notes no longer exchangeable gold , allowed bank not keep gold reserves. monetary policy of bank 1931 until 1970s had been keep stable exchange rate pound sterling.

through new commonwealth bank act , banking act 1945, board replaced six-member council, consisting of bank , treasury officials. additionally formalised bank s administrative powers of monetary , banking policy , exchange control , stated governor responsible managing bank. highly debated legislation in 1945 caused high amounts of regulation on private banks, later-governor h.c. coombs opposed to, along opposition bank nationalisation in 1947. when became governor in 1949, allowed private banks have more control on liquidity , attempted introduce market-based monetary policy. warned of possibility of stagflation in 1959.

legislation in 1951, substituted council 10-member board included governor, deputy governor , secretary treasury. board took on management of bank governor. reserve bank act 1959 (23 april 1959) took out part of commonwealth bank executed central bank functions , placed new reserve bank, while commercial , savings bank functions stayed commonwealth bank. created separate central bank australia in 1959, took effect 14 january 1960, many years after several other nations had 1 , similar proposal treasurer theodore.

in mid-1960s, monetary authorities accepted coombs conclusions , allowed flexible interest rate, making easier bank rely on open market operations. exchange control abolished after float of australian dollar occurred in 1983. in 5 years after campbell committee probe, 1979–1984, financial system in australia became deregulated. probe wallis committee in 1996, took effect in 1998. effects transfer of overseeing banks rba australian prudential regulation authority (apra) , creation of payments system board (psb), attempt maintain safety , performance of payments system. bank given powers within psb through additional legislation in 1998.

in august 1996, governor-designate ian macfarlane , treasurer issued statement on conduct of monetary policy restated roles of reserve bank , government of australia. affirmed government endorsement of reserve bank s inflation objective, introduced in 1993. change of government in december 2007 led statement, issued both former treasurer wayne swan , reserve bank governor glenn stevens. amends previous statements giving bank independence , encourages transparency , communication.