The Reserve Bank of Australia (RBA) is set for major modernisation, with the likely creation of a new board with IT oversight and chief operating officer role following an earlier review.
The federal government said today it intends to introduce enabling legislation to parliament for the overhaul, including establishing a sperate governance board and reinforcing its objective.
The proposed Treasury Laws Amendment (Reserve Bank Reforms) Bill 2023 is expected to boost the RBA’s “independence, clarify its role and modernise its structure” according to Treasurer Jim Chalmers.
In April this year, the central bank released the RBA Review which highlighted the need for changes in its operational and organisational approaches.
The new bill intends to implement many of the recommendations stemming from the RBA Review.
“We want to ensure Australia’s central bank remains world class with a monetary policy framework fit to meet our current and future economic challenges,” Chalmers said.
According to Chalmers, legislation is required to:
- Mandate that the RBA’s overarching objective to “promote the economic prosperity and welfare of the people of Australia, both now and into the future”;
- Confirm that monetary policy should have dual objectives of price stability and contributing to full employment;
- Reinforce the RBA’s independence, including by repealing the power of the Treasurer to overrule its monetary policy decisions;
- Establish a Monetary Policy Board and a separate Governance Board, and
- Clarify the RBA’s responsibility to contribute to financial system stability.
Chalmers said the legislation also establishes “robust governance” measures for the RBA.
In the April RBA review, it recommended setting up a governance board to support and oversee management would assist with creating stronger organisation to tackle cyber risks.
“More robust corporate governance arrangements would bring the RBA into line with best practice, reduce risk, clarify and increase accountability and increase its capacity to adapt to future challenges especially around people, technology and cyber risk,” the report said [pdf].
It also said the new board should be responsible for “oversight of organisational strategy, financial reporting, large IT and other projects, resourcing, strategic staff planning, risk management (including cyber risk) and delivery of banking and banknote services”.
Should the new legislation go through under the initial recommendation, it may also see the RBA establish a new role of chief operating officer that would focus on refining systems and processes plus create a more agile organisation.
On Monday Chalmers said the RBA Review’s “remaining recommendations are being implemented administratively by the government and the Reserve Bank, including through a new statement on the conduct of monetary policy that we aim to finalise next month.
“These changes are part of the Albanese government’s broader efforts to reform, renew and refocus the nation’s key economic institutions so that they can help meet current and future challenges,” he said.