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The Reserve Bank of Australia was formed in 1961 to operate as Australia's central bank and banknote issuing authority. The bank is the banker to the Federal government and some of the Australian states. It is headed by the Governor of the Reserve Bank, who as of 2004 is Ian Macfarlane.The bank is administered under the Reserve Bank Act 1959, passed by the Australian Federal Parliament. Section 10(2) of this act sets out the bank's primary responsibilities:
"It is the duty of the Reserve Bank Board, within the limits of its powers, to ensure that the monetary and banking policy of the Bank is directed to the greatest advantage of the people of Australia and that the powers of the Bank ... are exercised in such a manner as, in the opinion of the Reserve Bank Board, will best contribute to:
(a) the stability of the currency of Australia
(b) the maintenance of full employment in Australia; and
(c) the economic prosperity and welfare of the people of Australia."
In practice the Reserve Bank concentrates on the first objective, that is to control inflation through monetary policy. (See also open market operation.) The current objective is to maintain the annual inflation at between "2-3 per cent, on average, over the cycle".
Before 1961, the functions of the Reserve Bank were performed by the Note Issuing Branch of the Commonwealth Bank of Australia. The Commonwealth Bank continued to exist as a government operated retail and commercial bank (until it was privatised in the early 1990s), whilst the Reserve Bank offers no such services.
1 See also
2 External links
Australia
Banks of Australia
