Reserve Bank of New Zealand
The Reserve Bank of New Zealand (RBNZ) (Māori: Te Pūtea Matua) is the central bank of New Zealand. It sets monetary policy, regulates banks, insurers and other deposit takers, and issues the country's banknotes and coins. It is based in Wellington, and Anna Breman has been governor since December 2025.
Overview
The Reserve Bank of New Zealand (RBNZ) (Māori: Te Pūtea Matua) is the central bank of New Zealand. It sets monetary policy, regulates banks, insurers and other deposit takers, and issues the country's banknotes and coins. It is based in Wellington, and Anna Breman has been governor since December 2025. The bank was set up in 1934 under the Reserve Bank of New Zealand Act 1933 and has been wholly owned by the government since 1936. It is independent in how it runs monetary policy, is accountable to Parliament, and pays an annual dividend to the government. It is now governed by the Reserve Bank of New Zealand Act 2021. Since 1990, the bank's main monetary policy aim has been low, stable inflation. New Zealand was the first country to adopt inflation targeting. Since 2019, a Monetary Policy Committee, rather than the governor alone, has set the Official Cash Rate. In 2018 the bank's objectives were widened to include "maximum sustainable employment". This was removed in 2023, leaving price stability as the main goal. The bank is also responsible for prudential regulation. It supervises banks, insurers and non-bank deposit takers. Banks must hold minimum levels of capital and liquid assets and report regularly to the Reserve Bank. The bank also uses macroprudential policy to limit risky lending across the system, and works with other financial regulators through the Council of Financial Regulators. It cannot guarantee that a bank will not fail, but it has a tool called Open Bank Resolution, which would put the cost of a failure on shareholders and creditors rather than taxpayers. The Deposit Takers Act 2023 introduced a single set of rules for all deposit takers, together with a deposit insurance scheme.
History
The Reserve Bank of New Zealand was established from 1 August 1934 by the Reserve Bank of New Zealand Act 1933. The Reserve Bank first issued banknotes in 1934, see New Zealand pound. The Banking (Prudential Supervision) Act 1989, which came into effect in February 1990, resulted in the Reserve Bank becoming independent of government control in RBNZ's role of managing monetary policy by introducing an inflation targeting mandate. New Zealand was the first country in the world to try this regime, which was later adopted in other countries. The Reserve Bank of New Zealand Amendment Act 2008 included amendments to the BPSA 1989, including the introduction of capital requirements for deposit takers. The Non-Bank Deposit Takers Act 2013 gave RBNZ the role of prudential regulator and licensing authority for non-bank deposit takers. In December 2018, the Sixth Labour Government of New Zealand passed the Reserve Bank of New Zealand (Monetary Policy) Amendment Act 2018, which created the bank's monetary policy committee and codified "maximum sustainable employment" as an objective of monetary policy alongside price stability. In 2021, the Parliament passed the Reserve Bank of New Zealand Act 2021, which created a new statutory governance board. The RBNZA 2021 also designated the New Zealand Treasury as the bank's external monitor, mandated that the bank publish annual performance expectations and financial risk management statements, and establish a new Foreign Reserves Coordination Framework. 2021 also saw the Financial Market Infrastructures Act 2021 enacted, creating a regulatory regime for financial market infrastructures. In December 2023, the Sixth National Government of New Zealand passed the Reserve Bank of New Zealand (Economic Objective) Amendment Act 2023 eliminating the "maximum sustainable employment" objective. In February 2026, the Sixth National Government initiated a review of the Reserve Bank's decisions during the COVID-19 pandemic to lower the Official Cash Rate to 0.25 and inject NZ$55 billion worth of digital money into the New Zealand economy. In September 2026, this independent review led by former Reserve Bank assistant governor David Archer and Massachusetts Institute of Technology professor Athanasios Orphanides found that the Reserve Bank was too slow to raise interest rates during the COVID-19 pandemic in New Zealand, resulting in record high inflation and a lack of price stability. The review also found that the previous Labour Government's dual mandate for the Reserve Bank had resulted in a record low unemployment rate of 3.2 percent.
Museum
The Reserve Bank Museum, based at the bank's headquarters in Wellington Central, has been open to the public since 2006.
Ownership
The Reserve Bank has been wholly owned by the New Zealand Government since 1936. The Reserve Bank is established by the Reserve Bank of New Zealand Act 2021 and has statutory independence. The Reserve Bank is accountable to Parliament and provides an annual dividend to the Government.
Monetary policy
Since 1990, the Reserve Bank is responsible for the independent management of monetary policy in New Zealand.
Monetary policy committee
The RBNZ's Monetary policy committee, MPC, consists of internal and external committee members and has a mandate to set the Official Cash Rate and broader monetary stance to deliver low, stable inflation. replaced a single‑governor model in 2019. It has a mandate to maintain price stability through Inflation targeting. The degree of price stability is determined through a Policy Target Agreement with the Minister of Finance.
Official Cash Rate
The official cash rate (OCR) is the term used in Australia and New Zealand for the bank rate and is the rate of interest which the central bank charges on overnight loans between commercial banks. This allows the Reserve Bank of Australia and the Reserve Bank of New Zealand to adjust the interest rates that apply in each country's economy. The OCR cannot be changed by transactions between financial institutions as this does not change the supply of money, only its location. Only transfers between the central bank and an institution can affect the OCR. As banks settle all inter-bank transfers overnight, the central bank can regulate the rate paid for cash by the sale or buy back of bonds and other government issued securities (these are known as domestic market operations). As the sale or purchase of bonds affects the supply of money, then the interest rate will change to reflect its availability. This system indirectly influences the term structure of interest rates in the whole economy. Changes to the official cash rate generally affect the rates on housing and other loans within a matter of days or weeks. Under the Australian system the Reserve Bank of Australia issues its dealing intentions at the start of each day, and banks and other financial institutions will act prior to the actual rate being achieved. The rate is set by the central banks regularly, usually every month in Australia and every six weeks in New Zealand and forms one of the main tools to manage monetary policy.
Maximum sustainable employment
Between 2019 and 2023 New Zealand moved from a strict price‑stability regime to a dual mandate of price stability and maximum sustainable employment, MSE, implemented via the MPC and flexible inflation targeting. MSE was treated as an unobservable benchmark inferred from a set of labour‑market indicators, with particular attention to cyclical measures such as underutilisation and youth/Māori unemployment.
Fractional-reserve banking
Like all modern monetary systems, the monetary system in New Zealand is based on fiat and fractional-reserve banking. In a fractional-reserve banking system, the largest portion of money created is not created by the Reserve Bank itself. Private sector commercial banks create 80% or more.
Issuing of currency
The bank by virtue of the Reserve Bank Act has the sole right of issuing New Zealand legal tender notes and coins. The Reserve Bank controls the issuing of currency to banks and also replaces used and damaged money from circulation. In March 2005, the bank decided to remove the 5 cent coin from circulation (the following year), as well as reducing the size of 10, 20 and 50 cent coins. The Reserve Bank accepts all New Zealand currency for payment at face value. This applies to all demonetised or withdrawn currency, however such currency need not be accepted by money changers as it is no longer legal tender. All decimal notes are legal tender except $1 and $2 notes as these have been withdrawn. Damaged notes are still worth something so long as they are recognisable. The Reserve Bank website notes that as a rule of thumb if there is more than half a bank note they will pay its full value. To receive payment people have to turn in the note to either the Reserve Bank in Wellington or any bank. New Zealand Banknotes are signed by the RBNZ Governor. Between 1940 and 1984 they were signed by the RBNZ Chief Cashier, the first of whom was T. P. Hanna.
Central Bank Digital Currency
The RBNZ has been evaluating the pros and cons of issuing a central bank digital currency since 2018. In April 2024, the RBNZ held a public consultation on the move toward a digital dollar. This digital currency would coexist with physical cash while offering privacy, security, and trust for users.
Collectors coins
The Reserve Bank from time to time produces limited runs of legal tender coins for collectors and have a New Zealand theme and design. These coins generally do not circulate, but are legal tender. The coins are sold for the Reserve Bank via New Zealand Post's business unit.
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