The Reserve Bank of Australia, a government agency, came into being on 14 January 1960 as Australia's central bank and banknote issuing authority, when the Reserve Bank Act 1959 removed the central banking functions from the Commonwealth Bank.
The Bank has the responsibility of providing services to the Government of Australia in addition to also providing services to other central banks and official institutions. It currently consists of the Payments System Board, which governs the payments system policy of the Bank, and the Reserve Bank Board, which governs all other monetary and banking policies of the bank.
Both Boards consist of members of both the Bank, the Treasury, other Australian government agencies, and leaders of other institutions that are part of the economy. The structure of the Reserve Bank Board has remained consistent ever since 1951, with the exception of the change in the number of members of the Board. The Governor of the Reserve Bank of Australia is appointed by the Treasurer and chairs both the Payment Systems and Reserve Bank Boards and when there are disagreements between both Boards, the Governor resolves them.
From the middle of the 19th century into the 1890s, the prospects of a national bank forming grew. In 1911, the Commonwealth Bank was established, but did not have the authority to print notes, which was a power that was still reserved to the Treasury. A movement toward reestablishing the gold standard occurred after World War I, with John Garvan leading various boards in contracting the money supply on the route to doing so, and the gold standard was instituted for both the British pound sterling and the Australian pound in 1925.
During the Great Depression, the Australian pound became devalued, no longer worth the pound sterling, and formally departed from the gold standard with the Commonwealth Bank Act of 1932. Legislation in 1945 led to regulation of private banks which H.C. Coombs was opposed to, and when he became Governor in 1949, he gave them more overall control over their institutions. When the monetary authorities implemented the advice of Coombs to have a flexible interest rate, it allowed the Bank to rely more on open market operations.
The float of the Australian dollar happened in 1983, around the same period of time that the financial system in Australia was deregulated. Administration of the banks was transferred in 1998 from the Bank to the Australian Prudential Regulation Authority and the Payments System Board was created, while the Bank was given power within the said Board in the same year. The current Governor of the Reserve Bank is Glenn Stevens, who has been the incumbent since 18 September 2006.
Read more about Reserve Bank Of Australia: History (Mid 19th Century–1924), History (1924–present), Roles and Responsibilities, Reserve Bank Board, Payments System Board and The ACCC, Governors and Their Role
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