System objectives
The objective of the Reserve Bank's (RBNZ) institutional regime is to provide a modern monetary and financial policy framework for the RBNZ.
The framework ensures the RBNZ's empowering legislation and its approach to monetary and financial policy supports good economic management and reflects New Zealand's changing environment. The RBNZ Act 2021 provides the overarching framework for the RBNZ's main objectives in relation to its monetary and financial policy functions, which are:
- the economic objectives of achieving and maintaining stability in the general level of prices over the medium term and supporting maximum sustainable employment; and
- the financial stability objective of protecting and promoting the stability of New Zealand's financial system.
In turn, the framework promotes the prosperity and wellbeing of New Zealanders and contributes to a sustainable and productive economy, which is the overarching purpose of the legislative framework.
System description
The RBNZ institutional regime covers the overarching institutional framework for monetary policy formulation and implementation, and prudential regulation and supervision, which are carried out by the RBNZ.
Other related regulatory systems which the Treasury participates in, but is not the steward of, are:
- the financial markets conduct regulatory system, which is the responsibility of the Ministry of Business, Innovation and Employment (MBIE).
- the financial markets prudential regulatory system, which is the responsibility of the RBNZ, and sits under the institutional framework of the RBNZ.
Ministerial portfolios
The Minister of Finance is responsible for the RBNZ Act 2021, which is administered by the Treasury.
The Minister of Finance is also responsible for various sectoral legislation to govern prudential supervision, which are administered by the RBNZ and are listed below.
Key statutes
The Treasury is responsible for administering the RBNZ Act 2021, which is the overarching legislative framework governing the RBNZ.
The RBNZ is responsible for administering the following sectoral legislation:
- Insurance (Prudential Supervision) Act 2010
- Financial Market Infrastructures Act 2021
- Non-Bank Deposit Takers (NBDT) Act 2013
- The remaining provisions of the Reserve Bank of New Zealand Act 1989 that pertain to the regulation and supervision of registered banks, which will be renamed the Banking (Prudential Supervision) Act.
- The Banking (Prudential Supervision) Act and the NBDT Act will eventually be replaced by the new Deposit Takers regime.