Reserve Bank of Australia Annual Report 2020
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Also available at the Australian Government's Transparency Portal.
Contents
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Part 1: About the Reserve Bank
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The Reserve Bank is an independent central bank, accountable to the Parliament of Australia. The Bank has two boards: the Reserve Bank Board, which has responsibility for monetary and banking policy and the Bank's policy on other matters excluding payments system policy; and the Payments System Board, which has responsibility for payments system policy.
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The Reserve Bank Board comprises nine members: the Governor (Chair), Deputy Governor (Deputy Chair), Secretary to the Australian Treasury (ex officio member) and six other non-executive members appointed by the Treasurer. Further to the legislative requirements, and in recognition of their responsibility to uphold the integrity of the Board and the Reserve Bank, members have adopted a Code of Conduct.
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The Reserve Bank is managed by the Governor, Philip Lowe, and the Deputy Governor, Guy Debelle. It has five operational groups – Business Services Group, Corporate Services Group, Economic Group, Financial Markets Group and Financial System Group – and six supporting departments.
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Part 2: Performance
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The Reserve Bank operates in domestic and international financial markets in order to achieve its policy objectives. 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 as well as foreign central banks).
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The Reserve Bank provides banking and payment services to meet the needs of the Australian Government and to support the efficient and stable functioning of the Australian financial system. These services have underpinned the Government's measures to support Australian households and businesses during the COVID-19 pandemic by ensuring that financial assistance payments were processed quickly and reliably. A key ingredient in achieving this has been the Bank's systems. In August 2019, the Bank completed a number of multi-year projects to renovate and strengthen its banking and settlement capabilities. In addition to operating Australia's real-time gross settlement (RTGS) system, the Bank operates national infrastructure to support the settlement of real-time payments by households and businesses on a 24/7 basis. The Bank also developed services that enable the Australian Government to access 24/7 payment capabilities. These services are consistent with the Bank's strategic goal of providing innovative, high-quality banking and payment services to the Australian Government and its agencies and, in turn, the Australian public.
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The Reserve Bank is responsible for producing and issuing Australia's banknotes. In this role, the Bank ensures there are sufficient banknotes on issue to meet public demand, that banknotes in circulation are of high quality, and that the threat of counterfeiting is minimised. The new $20 banknote was released in October 2019, with the final denomination in the upgraded series, the new $100 banknote, expected to be released in late 2020. The COVID-19 pandemic presented challenges for the issuance of banknotes when lockdowns to contain the spread of the virus affected transport services across the country. In response, the Bank enacted contingency arrangements for a short period to maintain adequate supply of banknotes to the public. The Bank also drew on its extensive stocks to meet increased public demand for high-denomination banknotes as a store of value and for precautionary purposes, a development that is common during periods of acute economic and financial uncertainty.
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The COVID-19 pandemic has highlighted the need for international cooperation across a range of areas. International forums have stepped up their engagement and revised their priorities to focus on COVID-19-related issues, consistent with their objectives to facilitate cooperation on pressing global and regional issues. Groups in which the Reserve Bank participates have taken steps to mitigate the economic impact of the crisis, address stress in financial markets and foster a sustainable global recovery. Some of these forums have also considered how the regulation, oversight and structure of the global financial system have needed to adapt to facilitate the policy response to the pandemic. While face-to-face international meetings ceased in March 2020, central banks have continued to meet via video- or teleconferences and have increased the frequency of meetings owing to the rapid pace of developments. The timely sharing of information between members has been an important and valuable aspect of the Bank's participation in these international groups.
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The Reserve Bank is committed to its communication being open, transparent and accountable. The Bank's staff across Australia work to understand community priorities and concerns and, in turn, explain the Bank's policies and decisions. The Bank engages through a regional and industry liaison program, a public education program and consultations. The Bank communicates its policy decisions, and the context in which these are made, through speeches and publications. The Bank participates in parliamentary hearings and responds to public enquiries. It supports academic research, and operates a museum where visitors can discover the history of Australia's banknotes and economic development. The Bank also plays a modest philanthropic role in the community.
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Part 3: Management
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This chapter outlines the management structure of the Reserve Bank and describes the Bank's approach to managing its finances, technology, data and facilities. The subsequent chapters provide further detail on the Bank's people, risk management and earnings. The Bank is managed by the Governor, with assistance from the Executive Committee and the Risk Management Committee. The Bank is committed to the prudent management of its finances and the efficient functioning and security of its systems and facilities. It maintains a strong focus on cost control in discharging its key policy and operational responsibilities, and continues to invest in its technology, data and facilities, which is essential for the Bank to achieve its objectives.
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The Reserve Bank seeks to attract, develop and retain high-quality people with the technical skills and capabilities to achieve the Bank's strategic objectives, and behaviours that are consistent with the Bank's values. A key focus of the Bank is to support a diverse and inclusive workforce that is reflective of all Australians.
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Effective risk management is an integral element in the Reserve Bank achieving its strategic objectives and meeting its policy responsibilities. Accordingly, a risk management and control framework is embedded in the culture of the Bank. This framework supports effective decision-making, while allowing enterprise-wide and emerging risks to be identified and managed in a way that is consistent with the Bank's risk appetite. This framework is overseen by the Risk Management Committee.
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The Reserve Bank recorded a net profit of $2.5 billion in 2019/20. Earnings available for distribution, as determined by the Reserve Bank Act 1959, amounted to $2.6 billion, with the full sum distributed to the Commonwealth. The Reserve Bank remains well capitalised.
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Part 4: Financial Statements
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Part 5: Indexes
ISSN 1448–5303 (Print)
ISSN 1448–5192 (Online)