Plain language law

New Zealand law explained for everyone

Reserve Bank of New Zealand Act 2021

Central bank functions - Foreign exchange - Dealing in foreign exchange

136: Effect of directions on operational objectives

You could also call this:

"What happens when Reserve Bank directions clash with its goals"

Illustration for Reserve Bank of New Zealand Act 2021

You are dealing with foreign exchange and the Reserve Bank of New Zealand gives you a direction. If the Bank thinks following this direction will not agree with its economic goal but will disagree with one or more of its operational goals, it must take action. The Bank can tell the Minister it cannot follow those operational goals and ask for them to be changed. You need to know the Bank can only send this notice if the Monetary Policy Committee agrees. The Bank has to follow certain rules when giving directions about foreign exchange, as outlined in section 134. The Bank's goals are set out in an MPC remit. The Bank can ask for its operational goals to be amended or replaced if it thinks following a direction will not work with those goals. This is all part of the Reserve Bank of New Zealand Act 2021. The Bank must work within this Act when dealing with foreign exchange and giving directions.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS287184.

This page was last updated on — View changes

Topics:
Money and consumer rights > Banking and loansBusiness > Industry rules
Previous

135: Minister may defer publication and presentation to House of Representatives, or

"The Minister can delay sharing some information with the public to protect the Reserve Bank's work."

Next

137: Effect of Bank’s notice on duty to give effect to operational objectives, or

"What happens when the Bank gets a special notice about its goals"

Part 3Central bank functions
Foreign exchange: Dealing in foreign exchange

136Effect of directions on operational objectives

  1. This section applies if the Bank considers that giving effect to a direction under section 134 (while not being inconsistent with the economic objective) would be inconsistent with 1 or more operational objectives set out in an MPC remit.

  2. The Bank may, by notice in writing,—

  3. advise the Minister that the Bank will, in giving effect to the direction, be unable to give effect to those operational objectives; and
    1. request that the operational objectives be amended or replaced.

      1. The Bank may only give a notice with the approval of the MPC.

      Compare
      Notes
      • Section 136(1): amended, on , by section 12 of the Reserve Bank of New Zealand (Economic Objective) Amendment Act 2023 (2023 No 64).