Cash (notes and coins)

What is the Reserve Bank?

The Reserve Bank of New Zealand is New Zealand's central bank. It was established in 1934, and although not a government department, has been wholly owned by the government of New Zealand since 1936. Like most central banks, the Reserve Bank is primarily a policy organisation, and exists to do three main things:

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  formulate and implement monetary policy to maintain price stability and support maximum sustainable employment;
  
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  promote the maintenance of a sound and efficient financial system; and
  
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  meet the currency needs of the public.
  

The Reserve Bank’s purposes are specified in the Reserve Bank of New Zealand Act 1989, which also provides the Bank with the functions and powers it needs to achieve its purposes.

To achieve its purposes, the Reserve Bank carries out a wide range of tasks - from operating monetary policy to monitoring and supervising registered banks in order to maintain the health of the financial system, managing foreign reserves, operating in the financial markets, and issuing currency. The Reserve Bank has the sole right to produce currency in New Zealand.

New Zealand’s monetary policy framework is conventional by current international standards and has a goal of price stability. Targets for the Reserve Bank in carrying out monetary policy are defined by the Remit, which requires the Reserve Bank to keep CPI inflation between 1 and 3 percent on average over the medium term, with a focus on keeping future average inflation near the 2 percent target midpoint, and support maximum sustainable employment. 

The Reserve Bank has the role of registering banks that meet criteria relating to their financial position, governance and ability to carry on business in a prudent manner. The Reserve Bank also has regulatory, licensing and supervisory oversight of finance and insurance companies, building societies and credit unions.

The Reserve Bank operates New Zealand’s wholesale payment and settlement systems, which the registered banks and a number of other financial institutions use to complete transactions with each other. Transactions worth approximately $30 billion per day are settled through those systems. They are vital not only to the New Zealand economy, but also to the Reserve Bank’s implementation of monetary policy.

The Reserve Bank is one of three supervisors tasked with ensuring that financial institutions comply with obligations designed to detect and deter money laundering and terrorism financing. Taking action to reduce money laundering and the financing of terrorism is important, not only because of the social harm caused by these illegal activities, but also because of the damage these illegal activities can do to the stability and reputation of the nation’s financial system.

The Reserve Bank is structured around an economics department, which conducts research into the economy and provides advice on monetary policy; a financial system policy analysis and supervision department that works to maintain financial stability; a financial markets department that works to maintain financial stability; a payment operations department; and a currency department responsible for the design and issue of notes and coins. There are several support departments, including financial services, digital services, communications, internal audit, and human resources. The Reserve Bank employs approximately 250 staff and operates from a purpose-built office building on The Terrace in Wellington, and a small leased office space in central Auckland