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Reserve Bank of New Zealand Act 2021

Central bank functions - Bank to act as central bank

116: Central bank functions

You could also call this:

"What the Central Bank Does to Help New Zealand's Economy"

Illustration for Reserve Bank of New Zealand Act 2021

The central bank has several jobs. You can think of these jobs as including making monetary policy to help the economy, while also listening to what the government wants. The central bank also manages foreign money and trades it when needed, as outlined in subpart 3 and subpart 2. The central bank makes sure people have the money they need by issuing bank notes and coins, and checking they are distributed fairly, as explained in subparts 4 and 5. You can see this in how they monitor and manage the quality of bank notes and coins. They also watch how technology changes the way people use money. The central bank helps keep the financial system safe by giving money to approved groups and working with other banks, as seen in their settlement accounts and payments systems. You can find more information on this in subpart 2 and subpart 3. They work with other countries' central banks too, to keep the global financial system stable.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS287159.

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115: Bank to act as central bank, or

"The Bank helps other banks and keeps New Zealand's money system working properly."

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"The Bank's job is to help control prices and make good money decisions."

Part 3Central bank functions
Bank to act as central bank

116Central bank functions

  1. The central bank functions include—

  2. formulating (through the MPC) and implementing a monetary policy directed to the economic objective, while recognising the Crown’s right to determine economic policy (see subpart 2); and
    1. managing foreign reserves and otherwise dealing in foreign exchange for the purposes of the Bank’s objectives (see subpart 3); and
      1. doing the following to ensure that bank notes and coins in New Zealand meet the needs of the public (see subparts 4 and 5):
        1. issuing bank notes and coins:
          1. monitoring the distribution of bank notes and coins (and, if the Bank thinks fit, distributing bank notes and coins):
            1. managing the quality of bank notes and coins:
              1. monitoring the impact of technological innovation on the needs of the public for bank notes and coins; and
              2. providing liquidity facilities to entities approved by the Bank (on the terms and conditions the Bank thinks fit) in order to do either or both of the following:
                1. manage liquidity in the financial system:
                  1. protect or promote the stability of the financial system; and
                  2. providing settlement accounts for persons approved by the Bank; and
                    1. operating or otherwise participating in payments and settlement systems; and
                      1. liaising and co-operating with other central banks and relevant international institutions; and
                        1. carrying out any other central banking activities that are consistent with the Bank’s objectives and the purposes of this Act.

                          Notes
                          • Section 116(a): amended, on , by section 7 of the Reserve Bank of New Zealand (Economic Objective) Amendment Act 2023 (2023 No 64).