Reserve Bank of New Zealand

Established in 1939 The Reserve Bank of New Zealand; ran by Dr. Alan Bollard, is New Zealandís central bank and is located in Wellington, New Zealand. The bank operates with the New Zealand Dollar, commonly called the Kiwi Dollar, which consists of the bank notes $5, $10, $20, $50 and $100, with a single dollar subdivided in to 100 cents, of which the coins consist of 10c, 20c, 50c. There are also 1 and 2 dollar coins. They are the only institution that can issue legal tender New Zealand Dollars.

The second of the bankís three main operations is to use monetary policy in order to maintain price and currency stability in the country. They do this by using an official cash rate system, which is a way to affect short term interest rates through the overnight money market. These transactions pay interest of 0.25% above the cash rate. Banks that offer loans with higher interest rates than the official cash rate will be undercut by Banks that offer the lower official rate, and banks that offer lower rates than the official rate will make less compared to other banks who can deposit in the Reserve Bank or banks that use the official rate. Thus any changes affect the whole economy.

The third function of the bank is to promote the maintenance of a sound and efficient financial system, although they do not guarantee the system wonít fail and will not always act as a last resort lender. Despite this they supervise the banking system by monitoring the 17 recognized banks, assisting depositors to make sound decisions and encouraging banks to maintain good banking standards and practices. They get regular reports from each bank to assess the system.
The bank also operates a foreign reserves risk management program to coincide with its $18,008 (US Dollar equivalent) foreign exchange reserves.

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