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Reserve Bank of New Zealand Act 2021
Central bank functions
Monetary policy
Implementing monetary policy
121: Bank not required to implement monetary policy that is inconsistent with financial responsibility duties

Part 1:
Preliminary provisions

3Purposes 4Overview 5Interpretation 6Transitional, savings, and related provisions 7Act binds the Crown

Part 2:
Reserve Bank of New Zealand

Continuation of Reserve Bank of New Zealand

8Continuation of Reserve Bank of New Zealand 9Bank’s objectives 10Bank’s functions 11Minister may add functions on Bank’s request 12Status of Bank 13Core things Bank can do 14Other things Bank can do 15Acts must be for purpose of functions

Validity of acts

16Acts in breach of statute are invalid 17Some natural person acts protected 18Limits on protection of natural person acts 19Acts that are not in best interests of Bank 20Dealings between Bank and other persons 21Interpretation for sections 12 to 20

Minister’s role

22Minister's role 23When Minister may delegate powers

Board of Bank and its members

Monitor of Bank

80Appointment and role of monitor 81Minister must set expectations

Governor

82Governor 83Process requirements relating to Minister’s recommendation 84Term of appointment of Governor 85Terms and conditions of appointment of Governor 86Extension of term of Governor 87Qualifications of Governor 88Appointment procedure for Governor 89Validity of appointments 90Removal of Governor from office 91Board must advise Minister of just cause and may recommend removal 92Just cause for removal of Governor 93Process for removal of Governor 94Resignation of Governor 95When Governor ceases to hold office 96Minister must make temporary appointment if office of Governor is vacant

Monetary policy committee

97Monetary policy committee continues 98Functions of MPC 99Board must regularly review performance of MPC and members 100Membership of MPC

Charter for MPC

101Charter for MPC 102Content of charter 103Replacement charter 104Consultation about replacement charter 105Publication of charter

Code of conduct

106Code of conduct 107Content of code 108Publication of code

Other matters

109Other matters

Subsidiaries

110Acquisition of subsidiaries 111General duty relating to subsidiaries 112Duties relating to performance, remuneration of directors, and chief executives 113Acquisition of shares or interests in companies, trusts, and partnerships, etc 114Relationship with Companies Act 1993 and other Acts

Part 3:
Central bank functions

Bank to act as central bank

115Bank to act as central bank 116Central bank functions

Monetary policy

Formulating monetary policy

117Function to formulate monetary policy through MPC 118MPC must formulate monetary policy in manner consistent with economic objective and MPC remit 119What MPC must have regard to in formulating monetary policy

Implementing monetary policy

120Function to implement monetary policy 121Bank not required to implement monetary policy that is inconsistent with financial responsibility duties

Remit for MPC

122Remit for MPC 123Contents of MPC remit 124Other matters relating to MPC remit

Order providing for different economic objective or objectives

125Order providing for different economic objective or objectives 126Minister must consider replacing or amending MPC remit 127Period may be extended 128Revocation of order at end of period

Reports on monetary policy

129Regular reports on monetary policy 130Contents of reports on monetary policy 131Longer-term report on formulation and implementation of monetary policy 132Longer-term report must contain information required by charter

Foreign exchange

Dealing in foreign exchange

133Dealing in foreign exchange by Bank 134Power of Minister to direct Bank to deal in foreign exchange within guidelines 135Minister may defer publication and presentation to House of Representatives 136Effect of directions on operational objectives 137Effect of Bank’s notice on duty to give effect to operational objectives 138Effect of directions on monetary policy 139Effect of Bank’s notice on duty to comply with Minister’s direction

Foreign exchange gains and losses

140Foreign exchange gains and losses

Foreign reserves management and co-ordination framework

141Bank must hold and manage foreign reserves in accordance with framework 142Purposes of framework 143Minister and Bank must agree on framework 144Form and publication of framework 145Minister and Bank must ensure framework is in force 146Minister must have regard to framework when issuing direction under section 134 147Review of framework 148Bank must defer publishing information relating to certain directions

Currency

149Issue of currency by Bank 150Power of Bank to call in currency 151Effect of call-in notice 152Legal tender: bank notes 153Legal tender: coins 154Defacing bank notes 155Making or issuing of other bank notes or coins 156Reproduction or imitation of currency 157Court may order imitation currency and other things to be destroyed 158Time for filing charging document

Regulating bank note handling machines

159Interpretation in this subpart 160Bank may issue standards for bank note handling machines 161Procedure for issuing standards 162Content of standards 163Standards do not prevent return to Bank of unfit bank notes 164Bank may require operator to test bank note handling machines and to report 165Bank may require operator to cease operating machine until operator verifies compliance 166Infringement offence to fail to comply with notice 167Offence of intentionally or recklessly failing to comply with notice to cease operating machine 168District Court may make orders about bank note handling machines

Financial stability reports

169Purposes of financial stability report 170Financial stability reports

Part 4:
Operation of Reserve Bank

Independence of Bank

171Safeguarding independence of Bank

Whole of government directions

172Directions to support whole of government approach

Government directions to Bank

173Bank must comply with directions given under statutory power of direction 174Procedure for ministerial directions 175When procedural requirements for directions do not apply 176Review and expiry of all directions given to Bank

Employees

177Bank must be good employer 178Meaning of good employer 179Application of clauses 12 and 13 of Schedule 8 of Public Service Act 2020

Protections from liability

180Definitions for protections from liability 181Protection from liability for Bank 182Protection for certain persons 183Protections from liabilities of Bank 184Liability of member of board to Bank 185Protections do not affect other actions 186Indemnities in relation to act or omission 187Insurance for liability 188Breach of indemnity and insurance limits 189Crown indemnities in relation to statutory management 190Other provisions relating to Crown indemnities

Dealings with third parties

191Method of contracting 192Attorneys 193Address for service

Review of Bank’s operations and performance

194Review of Bank’s operations and performance 195Bank must co-operate with review

Power to request information from Bank

196Power to request information about operations and performance 197Power to request information about reporting and financial obligations 198Power to request information about assessing capability and performance of State services 199Good reasons for refusing to supply requested information

Miscellaneous

200Members, Governor, office holders, and employees are officials 201Evidence 202Policy advice 202AConsent to licence under Financial Markets Conduct Act 2013

Part 5:
Financial and accountability matters

Financial policy remit

203Financial policy remit 204Contents of financial policy remit 205Form, publication, and presentation of financial policy remit 206Review of financial policy remit 207Safeguarding independence of Bank

Direction relating to Bank’s minimum level of capital and financial risk management

208Power of Minister to direct Bank relating to minimum level of capital and financial risk management

Funding agreements and annual dividend

Funding agreements

209Funding agreements 210Contents of funding agreements 211Funding agreements to be published and presented to House of Representatives 212Expenditure where there is no current funding agreement

Annual dividend

213Determination of annual dividend 214Bank must publish matters relating to annual dividend

Reporting obligations

215Interpretation for subpart

Planning: statement of intent

Planning: statement of performance expectations

Reporting: annual report

239Obligation to prepare, present, and publish annual report 240Form and content of annual report 241Bank must defer including information in annual report about certain directions 242Disclosure of remuneration and of details of indemnities and insurance cover 243Form and content of statement of performance 244Annual financial statements 245Information about each class of excluded expenditure 246Statement of responsibility 247Audit report

Application of this subpart to Bank group

248Application of this subpart to Bank group 249Minister of Finance may require additional reporting

Other accountability statements and reports

Financial risk management

250Purposes of statement of financial risk management 251Obligation to prepare statement of financial risk management 252Minister and Bank must take reasonable steps to agree on annual dividend principles

Statements of prudential policy

253Purposes of statements of prudential policy 254Obligation to prepare statements of prudential policy

Assessment of regulatory impacts of policies

255Assessment of regulatory impacts of policies 256Content of assessment of proposed policy 257Bank must publish report on assessment of regulatory impacts

Accounting records

258Board must ensure that proper accounting records are kept

Miscellaneous

259Minister of Finance instructions 260Consultation with House of Representatives on reporting standards

Part 6:
Miscellaneous provisions

Information-gathering power

261Interpretation for this subpart

Bank’s information-gathering power

262Bank may require relevant person to supply information for central banking and financial system oversight functions 263Information about particular customer, client, or natural person not required 264Person required to supply information has same privileges as witnesses in court

Offences relating to information-gathering power

265Infringement offence to fail to supply information 266Offence of intentionally or recklessly failing to comply with notice to supply information

Requirement that information be reviewed

267Requirement that information be reviewed 268Offence of failing to comply with review requirements

Confidentiality

269Publication or disclosure of information by Bank 270Offence of unauthorised publication or disclosure 271Conditions relating to publication or disclosure of information 272Restrictions on further publication or disclosure of information 273Offence of unauthorised publication, disclosure, or use

Privacy Act 2020

274Subpart does not limit Privacy Act 2020

Provisions relating to infringement offences

275Proceedings for infringement offences 276When infringement notice may be issued 277Revocation of infringement notice before payment made 278What infringement notice must contain 279How infringement notice may be served 280Payment of infringement fees 281Reminder notices

Information sharing

282Sharing of information with certain law enforcement or regulatory agencies 283Conditions that may be imposed on providing information under this subpart 284Restriction on publication, disclosure, or use

Council of Financial Regulators

285Council of Financial Regulators 286Function of council 287Chairpersons of council 288Members of council

General offences

289Offences 290Penalties for offences

Regulations

291General regulations 292Regulations relating to fees, charges, and costs 293Regulated entities must pay levy to Bank 294Levy regulations 295Other provisions relating to levy regulations 296Consultation about proposed levy regulations

Amendments to other legislation

297Title of Reserve Bank of New Zealand Act 1989 changed 298Section 1 amended (Short Title and commencement)299Other amendments to Reserve Bank of New Zealand Act 1989 300Other legislation amended

Schedule 1:
Transitional, savings, and related provisions

Schedule 2:
Appointment of chairperson, etc, and board procedure

Schedule 3:
Remit and monetary policy committee

Schedule 4:
Amendments to other legislation

Summary of changes

Reserve Bank of New Zealand Act 2021

Central bank functions - Monetary policy - Implementing monetary policy

121: Bank not required to implement monetary policy that is inconsistent with financial responsibility duties

You could also call this:

"The Bank doesn't have to follow a money plan if it's not responsible with money."

Illustration for Reserve Bank of New Zealand Act 2021

You do not have to follow a monetary policy if it goes against your financial responsibilities. The Bank has duties under section 47 and must follow directions given under section 208. If a policy is inconsistent with these duties, the Bank does not have to implement it, as stated in section 120.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS470540.

This page was last updated on 1 January 2026 — View changes

Topics:

Money and consumer rights > Banking and loans

120: Function to implement monetary policy, or

"The Reserve Bank's job is to make monetary policy work."

122: Remit for MPC, or

"The Minister must have a set of instructions for the MPC at all times."

Part 3Central bank functions
Monetary policy: Implementing monetary policy

121Bank not required to implement monetary policy that is inconsistent with financial responsibility duties

Despite section 120, the Bank is not required to implement a monetary policy formulated by the MPC to the extent that the board considers that implementing the policy would be inconsistent with either or both of the following:
the board’s duty under section 47:
the Bank’s duty to comply with a direction given under section 208.