1924–present
[[File:Australia bonds.webp|thumb|Australia bonds
]] The Australian Notes Board (ANB) was created in 1920, within the Department of Treasury, which issued notes until 1924, when this function was transferred to the Commonwealth Bank.[6] The ANB was abolished by the Commonwealth Bank Act 1924.[20]
The Treasurer and Country Party Leader Earle Page wanted to end the monetary contraction which particularly hurt his farming constituents, who were as a result receiving reduced export prices.[19] The new board of directors replacing it,[6] which was composed of various areas of the industry, soon appointed Garvan chairman, and thus he continued his policies. In 1925, both the pound sterling and Australian pound returned to the pre-war gold standard. The primary role of the Commonwealth Bank continued to be a savings and trading bank, even though the government attempted to make the bank into a central bank through its actions in 1924.[19]
Legislation was introduced to the Parliament at the height of the Great Depression, in May 1930, by Treasurer E.G. Theodore, to transfer central banking powers from the Commonwealth Bank to a new central bank, but this failed.[19] The Australian pound was devalued in 1931 and it ceased to be tied to the pound sterling. The Reserve Bank departed from the gold standard with the Commonwealth Bank Act 1932, which made the notes no longer exchangeable into gold and allowed the bank not to keep any gold reserves.[21] The monetary policy of the bank from 1931 until the early 1970s had been to maintain a stable exchange rate with the pound sterling.[19]
Through the new Commonwealth Bank Act and the Banking Act 1945, the board was replaced by a six-member council, consisting of bank and treasury officials. It additionally formalised the bank's administrative powers of monetary and banking policy and exchange control and also stated the governor was responsible for managing the bank.[6] Highly debated legislation in 1945 caused high amounts of regulation on private banks, which later-Governor H.C. Coombs was opposed to, along with his opposition to bank nationalisation in 1947.[19] When he became governor in 1949, he allowed private banks to have more control over their liquidity and attempted to introduce market-based monetary policy.[6][19] He also warned of the possibility of stagflation in 1959.[19]
Legislation in 1951, substituted the council by a 10-member board which included the governor, deputy governor and the secretary to the treasury. The board took over the management of the bank from the governor. The Reserve Bank Act 1959 (23 April 1959) took out the part of the Commonwealth Bank that executed central bank functions and placed it into the Reserve Bank, while the commercial and savings bank functions stayed with the Commonwealth Bank.[6] This finally created a separate central bank for Australia in 1959, which took effect 14 January 1960, many years after several other nations already had one and similar to the early proposal by Treasurer Theodore.[6][19]
In the mid-1960s, monetary authorities accepted Coombs' conclusions and allowed a flexible interest rate, making it easier for the bank to rely on open market operations.[19] The Exchange Control was abolished after the float of the Australian dollar occurred in 1983. In the five years after the Campbell Committee probe, 1979–1984, the financial system in Australia became deregulated. Another probe was the Wallis Committee in 1996, which took effect in 1998. The effects were the transfer of overseeing the banks from the RBA to the Australian Prudential Regulation Authority (APRA) and the creation of the Payments System Board (PSB), which would attempt to maintain the safety and performance of the payments system. The bank was given powers within the PSB through additional legislation in 1998.[6]
In August 1996, then bank Governor-designate Ian Macfarlane and the Treasurer issued a Statement on the Conduct of Monetary Policy which restated the roles of the Reserve Bank and the Government of Australia. It affirmed government endorsement of the Reserve Bank's inflation objective, which was introduced in 1993. A change of government in November 2007 led to another Statement, which was issued by both then-Treasurer Wayne Swan and Reserve Bank Governor Glenn Stevens. This amends previous statements by giving the bank independence and encourages transparency and communication.[6]
In November 2024, a Bill was passed through Parliament that split the RBA into two separate boards, one to create monetary policy targets, and one for simply governing the bank such as its use of Information Technology devices.[22]
In January 2026, the central bank raised key interest rate for the first time in 2 years to 2.58% due to unexpectedly high inflation and unemployment hit a seven-month low in December.[23]
