The Minister of Finance has agreed with the Reserve Bank Governor a new five-year funding agreement which will ensure Te
Pūtea Matua (the Reserve Bank of New Zealand) has adequate resources to meet its increasing responsibilities and the
expectations of New Zealanders.
“The new funding will enable us to invest in the capability and capacity of our team, and ensure our systems are robust
and effective to support our vision of ‘Great Team, Best Central Bank’,” Reserve Bank Governor Adrian Orr said.
Unlike other Government agencies that seek funding through the annual budget process, the Reserve Bank makes money for
the Crown through its balance sheet activities. Under the Reserve Bank Act, the Minister of Finance and the Governor
enter into a five-year Funding Agreement – an important instrument for maintaining the Bank's operational autonomy, in
that it provides multi-year funding and specifies the amount of revenue the Bank may retain to fund its operations.
The new agreement will provide the Bank with an annual average of $115 million a year for its operations over the next
five years, with a further average of $13 million a year for the issuance of currency. The 2019/20 budget total was $80
million.
Mr Orr says it is a substantial and important increase, which means the Bank can address the critical risks to
delivering its mandate, respond to areas of past underinvestment, and establish a long-term model to promote the
wellbeing of New Zealand.
The bulk of this increased spending will focus on expanding and enhancing the Bank’s core activities, particularly
investing in financial supervisory and enforcement capability, as recommended by the International Monetary Fund’s 2017
Financial Sector Assessment Programme (FSAP) Review.
Spending will also be directed towards supporting the Bank’s day-to-day operations and investing in the upkeep of its
assets. This includes modernising the technology infrastructure and keeping security architecture up to date, designing
a suitable vaulting and distribution system for cash, and expanding our reach to stakeholders in Auckland.
Implementing and preparing for changes to our governing legislation is another key priority. The Bank’s future
legislation will bring a number of changes to how it operates and significantly enhance the Bank’s policy frameworks and
governance settings.
“As we focus on the immediate economic challenges brought about by the impact of COVID-19, it is equally important we
look for long-term opportunities presented by the recovery. The funding agreement will enable us to achieve a wide range
of initiatives, as part of our commitment to be better kaitiaki (guardians) of our financial system. We are committed to
managing our resources effectively and measuring our delivery on the priorities we’ve set,” Mr Orr said.
More information:The funding agreement has been signed but is yet to be ratified2020 Reserve Bank Funding AgreementThe Reserve Bank’s Funding Proposal, which provides the rationale for the funding agreement, and Statement of Intent, which outlines the Bank’s focus and themes for the next three years, will be released on June 29 at 1pm, with a speech
from Governor Adrian Orr.View the release on the Beehive's website: Protecting kiwis with stronger financial supervision