Reserve Bank of Australia Annual Report
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Letter of Transmittal
Part 1: About the Reserve Bank
Part 2: Our Operations in 2015/16
Operations in Financial Markets
The Reserve Bank transacts in domestic and international financial markets in order
to meet the Bank's policy objectives. These transactions include implementing
the monetary policy decisions of the Reserve Bank Board, facilitating the smooth
functioning of the payments system, managing the nation's foreign reserve assets
and providing banking services to clients (mainly the Australian Government and its
agencies and foreign central banks).
Banking and Payment Services
The Reserve Bank provides important banking and payment services that
underpin the efficient and stable functioning of the Australian financial system.
The Bank is currently developing new banking and settlement capabilities and
new infrastructure to support real-time settlement of payments by Australian
households and businesses. This will ensure that the Bank continues to meet the
needs of its government and agency customers and, in turn, the public.
The Reserve Bank is responsible for producing and issuing Australia's banknotes.
The Bank seeks to ensure there are sufficient high-quality banknotes in circulation
to maintain confidence in banknotes as a payment mechanism and store of wealth.
The Bank also conducts research and development to ensure that Australian
banknotes remain secure against counterfeiting. To this end, the Bank is issuing
an upgraded series of banknotes, with the first denomination, the $5, to be issued
from 1 September 2016. At the end of June 2016 there were 1.4 billion banknotes,
worth $70.2 billion, in circulation.
International Financial Cooperation
The Reserve Bank continues to participate actively in initiatives that seek to address
the challenges facing the global economy and improve the global financial
architecture. It does so through its membership of global and regional forums and
its close bilateral relationships with other central banks.
Community engagement is very important in ensuring that the Reserve Bank
succeeds in promoting the public interest, which is a core value of the Bank. Staff
across the Bank's Sydney Head Office and offices in other states work to ensure
that the Bank's role and actions are well understood by the community and that
the Bank in turn understands the community's perspectives. The Bank sponsors
academic research and education, and further engages with the public and
academic community through the Reserve Bank of Australia Museum.
Part 3: Management and Accountability
The total number of Reserve Bank employees increased by 7 per cent during
2015/16. Of the 263 staff members who joined the Reserve Bank during the year,
most were recruited on a limited-duration basis, largely to handle project work.
The Bank continues to attract diverse and talented new employees through its
graduate and internship programs.
Management of the Reserve Bank
Much of the Reserve Bank's call on resources comes from activities associated
with its key policy and operational responsibilities in financial markets, banking
and payments. A number of ongoing major projects, designed to strengthen its
operations, have added to the Bank's capital and operating costs in recent years.
Several of these are expected to be brought to completion in 2016/17 and costs are
expected to return to historical levels in later years.
The Reserve Bank seeks to carefully manage risks related to its role and
responsibilities. The Risk Management Committee, which is chaired by the
Deputy Governor, oversees the Bank's risk management processes and framework,
key to which is maintaining the Bank's active risk management culture.
Earnings and Distribution
The Reserve Bank's balance sheet fluctuates in size according to operations in financial
markets conducted to pursue its monetary policy objectives and support an efficient
and orderly payments system in Australia. The Bank earns a profit in most years. It holds
reserves that are sufficient to cover potential financial losses. In 2015/16, the Bank
recorded a net profit of $2.9 billion, with earnings available for distribution of $4.6 billion.
Pro Forma Business Accounts
The Pro Forma Business Accounts for the Reserve Bank's contestable business have
been prepared in accordance with competitive neutrality guidelines. These accounts
do not form part of the audited financial statements.
Annual Performance Statement
Statutory Reporting Requirements
The Reserve Bank has a number of statutory reporting requirements that extend
beyond its policy objectives and cover areas such as equal employment opportunity,
work health and safety and freedom of information requests submitted to the Bank.
Priorities for the Bank's Diversity and Inclusion Program in 2015/16 included gender
diversity, the Bank's culture of inclusiveness and flexible work practices.
Part 4: Financial Statements
Part 5: Indexes
ISSN 1448–5303 (Print)
ISSN 1448–5192 (Online)