RBA HSC Economic Essay

Topics: Money, Central bank, Bank Pages: 3 (708 words) Published: June 10, 2014
The RBA is Australia’s central bank
Its main roles are to conduct monetary policy and oversee the stability of the financial system Controls a country’s money and banking system
Set up as a financial business with the desire to make profit and it does not deal with ordinary customers Its primary purpose is the overall management of the financial system in accordance with the economic objectives of the Commonwealth Government Created in 1959 under the Reserve Bank Act 1959

Prior to that, limited central banking operations were conducted by the Commonwealth Bank

Functions of RBA
Conducting monetary policy on behalf of the government:
Monetary policy is defined as Reserve Bank action designed to influence the cost and availability of money in the Australian economy through influencing the general level of interest rates Reserve Bank conducts monetary policy with the aim of achieving a sustained low inflation rate while encouraging economic growth

System stability:
Reserve Bank’s traditional role of prudential supervision of banks is now the responsibility of the Australian Prudential Regulation Authority (APRA) RBA retains traditional responsibility for the overall stability of the financial system Provides guidelines to foster the stability of individual financial institutions, and these guidelines are enforced by the APRA RBA also seeks to maintain long-term financial stability of the financial system by avoiding (or at least reducing the risk of) financial crisis This protects deposits of members of public

Control of note issue:
Reserve Bank is the sole issuing authority for Australian currency All Australian currency is manufactured by Note Printing Australia, which is a division of the RBA Volume of notes and coins on issue at any particular time will vary according to the community’s demand for funds RBA seeks to accommodate for different demands for cash at different times during the year

Regulation of payments system:
RBA is responsible...
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