Reserve Bank of Australia Annual Report 2012

Download the complete Report 4.4MB

Contents

• Letter of Transmittal Download 732KB
• Governor's Foreword Download 79KB
• Functions and Objectives of the Reserve Bank Download 73KB
  The Reserve Bank of Australia is Australia's central bank. It was established by the Reserve Bank Act 1959, which sets out the powers of the Bank's Board and the objectives of its policies. The Act states that it is the Bank's duty to contribute to the maintenance of price stability, full employment, and the economic prosperity and welfare of the Australian people. For almost 20 years, this general mandate has found concrete expression in the form of a medium-term inflation target of 2–3 per cent, on average, over the business cycle.
• Governance Download 103KB
  The activities undertaken by the Reserve Bank are overseen by the Reserve Bank Board, Payments System Board and several permanent committees. The Reserve Bank Board has responsibility for monetary policy and financial stability, as well as a range of other statutory obligations, while the Payments System Board determines the Bank's payments system policy. The Bank's permanent committees include the Reserve Bank Board Audit Committee and Remuneration Committee, the Executive Committee and the Risk Management Committee, both of which comprise senior executives.
• Reserve Bank Board Download 126KB
  The Board comprises the Governor (Chairman), Deputy Governor (Deputy Chairman), Secretary to the Treasury and six external members appointed by the Treasurer, a total of nine. Two members completed terms on the Board during the past year. Ric Battellino retired as Deputy Governor and was succeeded by Philip Lowe. Graham Kraehe's term as a non-executive member ended and Heather Ridout was appointed to the Board.
• Accountability and Communication Download 324KB
  The Reserve Bank seeks to ensure a high degree of transparency about its goals, decision-making processes and the basis of its policy decisions. In addition to the regular communication about monetary policy and decisions of the Reserve Bank Board, the Bank has an active program of communication about its role and functions. It informs financial markets, media and the public about its monetary policy thinking through the quarterly Statement on Monetary Policy and its assessment of Australia's financial system through its bi-annual Financial Stability Review. It disseminates research conducted by its staff in the form of Research Discussion Papers and in articles in the quarterly Bulletin, which in 2011/12 covered a range of topics, including the terms of trade, the effects of conditions in financial markets on the real economy and co-movements in inflation across countries. The Governor and other senior staff gave more than 40 on-the-record speeches and attended a number of parliamentary hearings.
• Activities in 2011/12
  • Operations in Financial Markets Download 318KB
    The Reserve Bank undertakes transactions in domestic and international financial markets in order to implement the Board's monetary policy decisions, manage the nation's foreign reserve assets and provide banking services (mainly to the Australian Government). The structure of the Bank's balance sheet, which grew by around $6 billion over 2011/12, is influenced by the execution of these functions as well as the Bank's role in issuing the nation's banknotes. In response to new global liquidity standards, the Bank released details of a ‘committed liquidity facility’, which is designed to enable participating authorised deposit-taking institutions in Australia to access a pre-specified amount of liquidity, by selling securities to the Bank under repurchase agreements in an acute stress scenario. The Bank also signed a bilateral local currency swap agreement with the People's Bank of China, which allows the exchange of local currencies between the two central banks.
  • Banking and Payments Download 130KB
    The Reserve Bank provides a range of banking, registry and payment settlement services to participants in the Australian financial system, the Australian Government, and other central banks and international bodies. These include services associated with the operation of the Australian Government's principal public accounts; transactional banking services to government agencies; custodial, registry and related services; and the operation of the real-time gross settlement system for high-value Australian dollar payments. During 2011/12, the Bank completed a number of significant upgrade projects to the high- and low-value payments systems architecture and its own banking platforms. The Bank also completed scoping the requirements for a major program of work to upgrade its remaining banking systems and continues to invest in its settlement infrastructure.
  • Currency Download 261KB
    The Reserve Bank is responsible for ensuring that there are sufficient high-quality banknotes in circulation to meet the public's demand. The Bank ensures that enough banknotes are printed to meet public demand, maintains the quality of banknotes in circulation by withdrawing worn banknotes and replacing them with new banknotes and conducts research to ensure that Australian banknotes remain secure against counterfeiting. At the end of June 2012 there were around 1.1 billion banknotes on issue, worth $53.6 billion. The growth in banknote demand over the past year has returned to levels consistent with that experienced in the years leading up to the financial crisis. With only around 6.9 counterfeits detected per million genuine banknotes in circulation, the level of banknote counterfeiting declined substantially from the previous year and is low relative to international experiences.
  • International Financial Cooperation Download 235KB
    The Reserve Bank actively participates in work aimed at addressing the ongoing challenges facing the global economy and improving the global financial architecture. It does so through its membership of global and regional fora, including the G-20, the Financial Stability Board, the Bank for International Settlements, the Basel Committee on Banking Supervision, the Committee on Payment and Settlement Systems, the International Monetary Fund, the Executives’ Meeting of East Asia-Pacific Central Banks, and the Organisation for Economic Co-operation and Development. The Bank also maintains close bilateral relationships with other central banks.
  • The Reserve Bank in the Community Download 1.2MB
    In addition to its Head Office in Sydney, the Reserve Bank maintains offices in Melbourne, Brisbane, Adelaide and Perth. These offices play an important role in the Bank's business liaison program and form a key component of the Bank's communication with members of the public, business, government and academia in their respective states. The staff involved in the liaison program conducted around 900 interviews around the country over the past year. The Bank also convenes a Small Business Advisory Panel and this year convened a Small Business Finance Roundtable to better understand current concerns of this sector regarding access to finance, as well as to consider the characteristics of small businesses and challenges faced by the sector. The Museum of Australian Currency Notes, which houses a permanent collection of artefacts and also hosts periodic exhibitions, welcomed 12,500 visitors in the past year. The Bank continued to sponsor economic and financial research in areas that are closely aligned with its responsibilities, and contributed to various charitable initiatives.
• Management of the Reserve Bank Download 138KB
  Most of the Reserve Bank's operating costs are incurred in pursuing its objectives in the areas of monetary policy and financial stability, its operational responsibilities in banking and settlements, and in providing currency securely to the Australian community. Specific new initiatives in 2011/12 included establishing a representative office in Beijing in late 2011, to provide enhanced monitoring of economic and financial conditions in China. The Bank has 1,051 employees and maintains offices across Australia and in key locations overseas (Beijing, London and New York). The Bank is committed to improving the environmental performance of its operations and has made significant improvements in its energy and water use for most of its facilities.
• Risk Management Download 104KB
  The Reserve Bank is exposed to a broad range of risks in carrying out its responsibilities. The most significant risks are those associated with the financial assets held by the Bank to support its operations in financial markets. However, the Bank also faces operational risks through its banking, settlement and note issue functions and from the administration of the organisation itself. The Bank seeks to manage its risk profile carefully, with the Risk Management Committee providing oversight of the risk management process.
• Earnings and Distribution Download 192KB
  The Reserve Bank's balance sheet is largely made up of financial assets, primarily used for the purpose of conducting operations in financial markets in pursuit of its monetary policy objectives. While the Bank's balance sheet fluctuates in size, total assets averaged around $80 billion in 2011/12. These assets include Australia's foreign exchange reserves as well as domestic securities used to carry out liquidity management operations. The counterpart liabilities to these assets are banknotes on issue, deposits of the Australian Government and other customers, as well as capital and reserves. The Bank recorded an accounting profit of $1,076 million in 2011/12. The Deputy Prime Minister and Treasurer determined that a sum of $596 million be placed to the credit of the RBRF from earnings available for distribution in 2011/12 and a sum of $500 million paid as a dividend to the Australian Government. With the substantial depletion of the Reserve Bank Reserve Fund in previous financial years, the Board will seek to replenish this reserve over time to a level more appropriate to the risks faced by the Bank.
• Statutory Obligations Download 81KB
  The Reserve Bank is required to report to the Australian Parliament each year on its equity and diversity program. The major focus of work in this area last year was to better understand the equity and diversity issues associated with career progression and development, employee participation and work/life balance. The Bank is also required to report each year on matters of work health and safety, workers' compensation and rehabilitation as they affect the Bank. The Bank has a strong track record in all aspects of work health and safety, and compliance with the relevant legislation and the Bank's Conditions of Licence was confirmed by external audits of the Bank's safety, compensation and rehabilitation arrangements. In addition, the Bank is an Australian Government agency subject to the Freedom of Information Act 1982. It received 16 requests for access to documents under the FOI Act in the past year.
• Financial Statements Download 913KB
• Pro Forma Business Accounts Download 72KB
• Organisational Chart Download 144KB
• Executives of the Reserve Bank Download 102KB
• Contact Details Download 100KB
• Glossary Download 73KB
• Legislative Requirements Index Download 127KB

ISSN 1448–5303 (Print)
ISSN 1448–5192 (Online)