The Reserve Bank will introduce a number of new procedures and structural changes this year, starting at its monetary policy meeting next month, while other changes recommended by the RBA Review require the passage of legislation before they are implemented.
The government has introduced Treasury Laws Amendment (Reserve Bank Reforms) Bill 2023, setting out a new structure to replace the existing RBA board with a monetary policy board and governance board.
The RBA Review recommended the monetary policy board have more members with “deep formal expertise on economic and financial system matters”.
Six external board members will be appointed by the Treasury. They will make up the majority, alongside the RBA governor and deputy governor and the Secretary of the Treasury.
Other changes in the bill include a provision that the government cannot override RBA monetary policy decisions and a provision that the RBA does not have the power to determine the lending policies of private banks.
The amendment bill was introduced in November and has yet to be voted on. In the meantime, the RBA is implementing other changes recommended by the review.
This includes reducing the number of RBA board meetings to eight times a year from 11. Four of the meetings will be on the first Tuesday of February, May, August and November, with the other four midway between those meetings.
Board meetings will be longer, running over two days. The statement announcing the decision of the meeting will be issued by the board, not the governor.
The governor will hold a media briefing after each meeting. The Quarterly Statement on Monetary Policy will be released at the same time as the outcomes of the February, May, August and November meetings.
The idea of less frequent and longer meetings is to give the board more time to examine issues in detail and to have deeper discussions on monetary policy strategy.
Other planned changes include publication of an unattributed vote count, regular public appearance by board members, the establishment of an expert advisory group and publication of board papers with a five-year lag. These are likely to be introduced after the passage of the amendments.
The RBA has reviewed its code of conduct and will strengthen standards dealing with conflicts of interests by making it clear that board members and entities they control are prohibited from transacting in interest rate and foreign exchange derivatives and from active trading in financial instruments.
The RBA will have a chief operating officer and more management vacancies will be advertised externally.
Risk management and operational resilience will be strengthened, with a particular focus on the payments infrastructure it operates.
The bank is establishing a separate communications department, which will, among other things, advise the governor and the board on strategic communications.
The members of the Council of Financial Regulators – the RBA, APRA and ASIC – will update their memorandum of understanding to set clear and specific commitments regarding co-operation.