The Reserve Bank of New Zealand Bill has passed following its third reading in Parliament yesterday.
Once the changes come into effect (the anticipated commencement date is 1 July 2022), all decisions other than monetary policy will be made by a board rather than a single decision-maker – with the Governor as a member of the board - and the RBNZ’s financial stability objective will be reframed as “protecting and promoting the stability of New Zealand’s financial system”.
In addition:
- the funding model will be changed to “promote transparency” and allow for appropriate recovery of costs, through industry levies and fees;
- the Finance Minister will be empowered to issue a Financial Policy Remit, setting out matters to which the Reserve Bank board must have regard;
- the Minister will also be able to direct the Bank to maintain a minimum level of capital;
- the central bank’s accountability and reporting frameworks will be updated; and
- the Council of Financial Regulators will gain a statutory mandate to “support effective and responsive regulation of the financial system, by facilitating cooperation and coordination between its members”.
“Not only does [this legislation] modernise the more than 30-year old Reserve Bank Act, the reforms support and protect the Reserve Bank’s independence while ensuring it operates in an accountable and transparent manner,” Finance Minister Grant Robertson said.
The third and final Bill in this set of reforms of the legislation governing the RBNZ and its activities – the Deposit Takers Bill – is expected to be introduced into Parliament in early 2022.