Reserve Bank of Australia Annual Report
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Letter of Transmittal
Part 1: About the Reserve Bank
Part 2: Our Operations
Operations in Financial Markets
The Reserve Bank operates in domestic and international financial markets in
order to achieve the policy objectives for which it is responsible. These operations
include implementing the monetary policy decisions of the Reserve Bank Board,
facilitating the smooth functioning of the payments system, managing the nation's
foreign exchange reserve assets and providing banking services to clients (mainly
the Australian Government and foreign central banks).
Banking and Payment Services
The Reserve Bank provides banking and payment services to support the efficient
and stable functioning of the Australian financial system. The Bank is currently
engaged in projects to renovate and strengthen its banking and settlement
capabilities and operate new infrastructure to support real-time payments by
households and businesses on a 24/7 basis. This will enable the Bank to continue to
meet the banking and payment needs of its government and agency customers
and, in turn, the Australian public.
The Reserve Bank is responsible for producing and issuing Australia's banknotes.
Public demand for banknotes stems from the role of banknotes as both a payment
mechanism and store of value. To maintain the capacity of banknotes to perform
these roles, the Bank seeks to ensure banknotes in circulation are of high quality
and sufficient volume to meet public demand. The Bank conducts research
and development to ensure that Australia's banknotes remain secure against
counterfeiting. Based on this work, the Bank is issuing an upgraded series of
banknotes with world-leading security features.
International Financial Cooperation
The Reserve Bank participates 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.
The Reserve Bank devotes considerable effort to community engagement. Staff in
the Bank's Head Office and State Offices work to help the community understand
the Bank's role and, in turn, to understand the community's perspectives. The Bank
supports academic research, continues to build its public education program, and
also engages with the public through the Reserve Bank of Australia Museum.
Part 3: Management and Accountability
The Reserve Bank seeks to attract, develop and retain high-quality people, and to
foster an environment where there is a strong focus on values and behaviour, and
a clear understanding of the Bank’s risk appetite. This is supported by the Bank’s
People and Culture Strategy, which focuses on leadership development, diversity
and inclusion. In 2017/18, the proportion of women in management increased and
the Bank created additional employment opportunities for Indigenous Australians
and those seeking flexible work arrangements. The total number of employees
declined slightly. The composition of the workforce changed, reflecting the
completion of a number of large projects.
Management of the Reserve Bank
The Reserve Bank has a strong emphasis on efficiency and cost control, supported by
a focus on continuous improvement and established budget processes. Technology
plays a key role in the Bank's ongoing operations and forms a major component of
a number of the Bank’s strategic projects. Further significant progress was made on
projects in 2017/18, with completion of the settlements infrastructure supporting
the New Payments Platform (NPP) and enhancements to banknote logistics.
Accordingly, project costs declined, although the Bank's general operating costs
increased as a result of operating this new infrastructure.
In meeting its objectives, the Reserve Bank takes on a variety of risks. The framework
through which these risks are managed is overseen by the Risk Management
Committee. The Bank seeks to promote a strong risk management culture and
deploys a framework designed to ensure the consistent management of strategic,
operational and financial risks.
Earnings, Distribution and Capital
In 2017/18, the Reserve Bank recorded a net profit of $3.8 billion. In accordance with
the Reserve Bank Act 1959, unrealised gains are not available for distribution and
are transferred to the unrealised profits reserve. Earnings available for distribution
amounted to $0.7 billion. The Reserve Bank remains well capitalised.
Pro Forma Business Accounts
The following set of accounts for the Reserve Bank's contestable business has been
prepared in accordance with competitive neutrality guidelines. These accounts do
not form part of the audited financial statements.
Annual Performance Statement for 2017/18
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.
Part 4: Financial Statements
Part 5: Indexes
ISSN 1448–5303 (Print)
ISSN 1448–5192 (Online)